Phillips 66 (PSX) shifts portfolio toward NGL, refining control and renewables
Filing Impact
Filing Sentiment
Form Type
10-K
Rhea-AI Filing Summary
Phillips 66 describes a large, diversified downstream and midstream energy business organized into Midstream, Chemicals, Refining, Marketing & Specialties, and Renewable Fuels. The company reports a non‑affiliate common stock market value of
Key 2025 actions include acquiring the Coastal Bend NGL assets and the remaining 50% of WRB Refining, expanding control over U.S. midstream and refining capacity, while disposing of interests in Gulf Coast Express Pipeline, Coop Mineraloel AG, and most of its Germany/Austria retail business.
Phillips 66 is accelerating lower‑carbon initiatives through its Rodeo Renewable Energy Complex, which can process about 50,000 B/D of renewable feedstocks, and a sustainable aviation fuel agreement for approximately 83 million gallons over three years. The report outlines extensive risk factors, including commodity price volatility, regulatory and climate policy changes, operational hazards, and political and legal uncertainties.
Positive
- None.
Negative
- None.
Insights
Strategic portfolio shifts toward midstream scale and renewables, with balanced risk disclosure.
Phillips 66 emphasizes a diversified earnings base, with extensive midstream, refining, chemicals and marketing networks and about 12,600 employees. Acquiring the Coastal Bend NGL system and the remaining 50% of WRB Refining increases control over key Gulf Coast and Midcontinent assets while divesting noncore European marketing interests.
The company describes major NGL infrastructure, including the Sweeny Hub’s demonstrated fractionation capacity of 675,000 B/D and LPG export capability of 300,000 B/D, supporting integrated U.S. Gulf Coast value chains. At the same time, idling the Los Angeles Refinery and shifting decommissioning to Corporate marks a structural West Coast refining pullback.
Renewable Fuels are a growing pillar: the Rodeo Complex can process roughly 50,000 B/D of renewable feedstocks, and a sustainable aviation fuel agreement for about 83 million gallons over three years targets lower life‑cycle emissions. Extensive risk factors stress margin cyclicality, evolving climate and fuel regulation, California‑specific rules like SBx 1‑2, and physical climate risks, underscoring that future performance depends heavily on policy evolution and commodity cycles.
| 2025 | ||||||||||||||
| UNITED STATES | ||||||||
| SECURITIES AND EXCHANGE COMMISSION | ||||||||
| Washington, D.C. 20549 | ||||||||
FORM 10-K
| (Mark One) | ||||||||
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the fiscal year ended | ||||||||
OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the transition period from | to | |||||||||||||
Commission file number: 001-35349
| (Exact name of registrant as specified in its charter) | ||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 832 -765-3010
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||||||||
Securities registered pursuant to Section 12(g) of the Act: None | |||||||||||||||||||||||||||||||||||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | ☒ | ☐ | No | ||||||||||||||||||||||||||||||||
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | ☐ | Yes | ☒ | ||||||||||||||||||||||||||||||||
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ☒ | ☐ | No | ||||||||||||||||||||||||||||||||
| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | ☒ | ☐ | No | ||||||||||||||||||||||||||||||||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | |||||||||||||||||||||||||||||||||||
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||||||||||||||
| Emerging growth company | |||||||||||||||||||||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||||||||||||||||||||||||||||
| Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. | |||||||||||||||||||||||||||||||||||
| If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. | |||||||||||||||||||||||||||||||||||
| Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). | ☐ | ||||||||||||||||||||||||||||||||||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | ☐ | Yes | No | ||||||||||||||||||||||||||||||||
The aggregate market value of common stock held by non-affiliates of the registrant on June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, based on the closing price on that date of $119.30, was $48.2 billion. The registrant, solely for the purpose of this required presentation, had deemed its Board of Directors and executive officers to be affiliates, and deducted their stockholdings in determining the aggregate market value.
The registrant had 400,744,022 shares of common stock outstanding at January 31, 2026.
Documents incorporated by reference:
TABLE OF CONTENTS
Item | Page | ||||
PART I | |||||
1 and 2. Business and Properties | 1 | ||||
Corporate Structure | 1 | ||||
Segment and Geographic Information | 2 | ||||
Midstream | 2 | ||||
Chemicals | 11 | ||||
Refining | 12 | ||||
Marketing and Specialties | 16 | ||||
Renewable Fuels | 18 | ||||
Energy Research & Innovation | 18 | ||||
Human Capital | 18 | ||||
Competition | 20 | ||||
General | 20 | ||||
1A. Risk Factors | 21 | ||||
1B. Unresolved Staff Comments | 36 | ||||
1C. Cybersecurity | 36 | ||||
3. Legal Proceedings | 37 | ||||
4. Mine Safety Disclosures | 38 | ||||
Information About Our Executive Officers | 39 | ||||
PART II | |||||
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 40 | ||||
6. [Reserved] | 41 | ||||
7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 42 | ||||
7A. Quantitative and Qualitative Disclosures About Market Risk | 87 | ||||
Cautionary Statement for the Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 | 89 | ||||
8. Financial Statements and Supplementary Data | 91 | ||||
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 169 | ||||
9A. Controls and Procedures | 169 | ||||
9B. Other Information | 169 | ||||
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 169 | ||||
PART III | |||||
10. Directors, Executive Officers and Corporate Governance | 170 | ||||
11. Executive Compensation | 170 | ||||
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 170 | ||||
13. Certain Relationships and Related Transactions, and Director Independence | 170 | ||||
14. Principal Accountant Fees and Services | 170 | ||||
PART IV | |||||
15. Exhibit and Financial Statement Schedules | 171 | ||||
16. Form 10-K Summary | 171 | ||||
Signatures | 179 | ||||
Unless otherwise indicated, the “company,” “we,” “our,” “us” and “Phillips 66” are used in this report to refer to the businesses of Phillips 66 and its consolidated subsidiaries.
This Annual Report on Form 10-K (the Annual Report) contains forward-looking statements including, without limitation, statements relating to the company’s plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “priorities” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking. The company does not undertake to update, revise or correct any of the forward-looking information unless required to do so pursuant to applicable law. Readers are cautioned that such forward-looking statements should be read in conjunction with the company’s disclosures under the headings “Risk Factors” and “CAUTIONARY STATEMENT FOR THE PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.”
PART I
Items 1 and 2. BUSINESS AND PROPERTIES
CORPORATE STRUCTURE
Phillips 66, headquartered in Houston, Texas, was incorporated in Delaware in 2011 in connection with, and in anticipation of, a restructuring of ConocoPhillips that separated its downstream businesses into an independent, publicly traded company named Phillips 66. The two companies were separated by ConocoPhillips distributing to its shareholders all the shares of common stock of Phillips 66 after the market closed on April 30, 2012 (the separation). Phillips 66 stock trades on the New York Stock Exchange under the “PSX” stock symbol.
Operating Segments
Our businesses are organized into five operating segments:
1)Midstream—Provides crude oil and refined petroleum product transportation, terminaling and storage services, as well as natural gas and natural gas liquids (NGL) gathering, processing, transportation, fractionation, storage and marketing services in the United States. In addition, this segment exports liquefied petroleum gas (LPG) to global markets.
2)Chemicals—Consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics on a worldwide basis.
3)Refining—Refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels. At December 31, 2025, this segment included 10 refineries in the United States and Europe.
4)Marketing and Specialties (M&S)—Purchases for resale and markets refined products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.
5)Renewable Fuels—Processes renewable feedstocks into renewable products at the Rodeo Renewable Energy Complex (Rodeo Complex) and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.
Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, business transformation restructuring costs, our investment in NOVONIX Limited (NOVONIX), and various other corporate activities. Corporate assets include all cash, cash equivalents, income tax-related assets and enterprise information technology assets. Effective in the first quarter of 2026, activities associated with decommissioning and redeveloping at our idled Los Angeles Refinery will be included in Corporate and Other. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information.
1
SEGMENT AND GEOGRAPHIC INFORMATION
MIDSTREAM
The Midstream segment consists of two businesses:
•Transportation—Transports crude oil and other feedstocks to our refineries and other locations, delivers refined petroleum products to market, and provides terminaling and storage services for crude oil and refined petroleum products.
•NGL—Gathers, processes, transports and markets natural gas; transports, fractionates, markets and exports NGL.
At December 31, 2025, our Midstream segment owned or held partial interests in approximately 70,000 miles of crude oil, refined petroleum product, NGL and natural gas pipeline systems; 39 refined petroleum product terminals; 35 natural gas gathering and processing plants; 15 crude oil terminals; 10 NGL fractionation facilities; six NGL terminals; a petroleum coke exporting facility; and various other storage and loading facilities that are located in the United States.
Acquisitions
On April 1, 2025, we acquired all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, together with their respective subsidiaries (collectively referred to herein as Coastal Bend), which own various long haul NGL pipelines, fractionation facilities and distribution systems.
See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information regarding the Coastal Bend acquisition.
Investment Disposition
On January 30, 2025, DCP Midstream, LP (DCP LP), a consolidated subsidiary in which we hold an aggregate direct and indirect economic interest of 86.8%, sold its 25% ownership interest in Gulf Coast Express Pipeline LLC.
See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the above disposition.
2
Transportation
We own, hold partial interests in, or lease various assets to provide transportation, terminaling and storage services. These assets include crude oil, refined petroleum product, NGL, and natural gas pipeline systems; crude oil, refined petroleum product and NGL terminals; a petroleum coke handling facility; marine vessels; railcars and trucks.
Pipelines and Terminals
The following table depicts our ownership interest in major pipeline systems included in our Transportation business at December 31, 2025:
| Name | State of Origination/Terminus | Interest | Length (Miles) | Gross Capacity (MB/D)* | ||||||||||||||||||||||
| Crude Oil | ||||||||||||||||||||||||||
| Bakken Pipeline | North Dakota/Texas | 25 | % | 1,918 | 750 | |||||||||||||||||||||
| Bayou Bridge | Texas/Louisiana | 40 | 213 | 480 | ||||||||||||||||||||||
| Clifton Ridge | Louisiana | 100 | 10 | 260 | ||||||||||||||||||||||
| CushPo | Oklahoma | 100 | 62 | 130 | ||||||||||||||||||||||
| Glacier | Montana | 79 | 800 | 124 | ||||||||||||||||||||||
| Gray Oak Pipeline | Texas | 7 | 862 | 900 | ||||||||||||||||||||||
| Line 100 | California | 100 | 79 | 61 | ||||||||||||||||||||||
| Line 200 | California | 100 | 228 | 100 | ||||||||||||||||||||||
| Line 300 | California | 100 | 61 | 34 | ||||||||||||||||||||||
| Line 400 | California | 100 | 153 | 46 | ||||||||||||||||||||||
| Line O | Oklahoma/Texas | 100 | 276 | 38 | ||||||||||||||||||||||
| New Mexico Crude | New Mexico/Texas | 100 | 227 | 106 | ||||||||||||||||||||||
| Oklahoma Crude | Texas/Oklahoma | 100 | 217 | 100 | ||||||||||||||||||||||
| STACK PL | Oklahoma | 50 | 149 | 150 | ||||||||||||||||||||||
| Sweeny Crude | Texas | 100 | 56 | 617 | ||||||||||||||||||||||
| West Texas Crude | Texas | 100 | 1,079 | 140 | ||||||||||||||||||||||
*Thousands of barrels daily (MB/D). | ||||||||||||||||||||||||||
3
| Name | State of Origination/Terminus | Interest | Length (Miles) | Gross Capacity (MB/D) | ||||||||||||||||||||||
| Refined Petroleum Products | ||||||||||||||||||||||||||
| ATA Line | Texas/New Mexico | 50 | % | 293 | 40 | |||||||||||||||||||||
| Borger to Amarillo | Texas | 100 | 93 | 74 | ||||||||||||||||||||||
| Borger-Denver | Texas | 100 | 38 | 39 | ||||||||||||||||||||||
| Borger-Denver | Texas/Colorado | 65 | 207 | 39 | ||||||||||||||||||||||
| Borger-Denver | Colorado | 70 | 152 | 39 | ||||||||||||||||||||||
| Cherokee East | Oklahoma/Missouri | 100 | 320 | 59 | ||||||||||||||||||||||
| Cherokee North | Oklahoma/Kansas | 100 | 29 | 55 | ||||||||||||||||||||||
| Cherokee South | Oklahoma | 100 | 98 | 47 | ||||||||||||||||||||||
| Cross Channel Connector | Texas | 100 | 5 | 197 | ||||||||||||||||||||||
| Explorer | Texas/Indiana | 22 | 1,830 | 660 | ||||||||||||||||||||||
| Gold Line | Texas/Illinois | 100 | 686 | 120 | ||||||||||||||||||||||
| Heartland* | Kansas/Iowa | 50 | 49 | 30 | ||||||||||||||||||||||
| LAX Jet Line | California | 50 | 19 | 41 | ||||||||||||||||||||||
| Los Angeles Products | California | 100 | 22 | 132 | ||||||||||||||||||||||
| Paola Products | Kansas | 100 | 106 | 120 | ||||||||||||||||||||||
| Pioneer | Wyoming/Utah | 50 | 562 | 63 | ||||||||||||||||||||||
| Powder River | Colorado/Texas | 100 | 350 | 13 | ||||||||||||||||||||||
| Richmond | California | 100 | 14 | 31 | ||||||||||||||||||||||
| SAAL | Texas | 33 | 102 | 32 | ||||||||||||||||||||||
| SAAL | Texas | 54 | 19 | 30 | ||||||||||||||||||||||
| Seminoe | Montana/Wyoming | 100 | 342 | 50 | ||||||||||||||||||||||
| Standish | Oklahoma/Kansas | 100 | 92 | 77 | ||||||||||||||||||||||
| Sweeny to Pasadena | Texas | 100 | 120 | 348 | ||||||||||||||||||||||
| Torrance Products | California | 100 | 8 | 279 | ||||||||||||||||||||||
| Watson Products | California | 100 | 9 | 238 | ||||||||||||||||||||||
| Yellowstone | Montana/Washington | 46 | 710 | 68 | ||||||||||||||||||||||
| NGL | ||||||||||||||||||||||||||
| Blue Line | Texas/Illinois | 100 | 688 | 26 | ||||||||||||||||||||||
| Brown Line | Oklahoma/Kansas | 100 | 76 | 26 | ||||||||||||||||||||||
| Conway to Wichita | Kansas | 100 | 55 | 26 | ||||||||||||||||||||||
| Medford | Oklahoma | 100 | 42 | 25 | ||||||||||||||||||||||
| Skelly-Belvieu | Texas | 50 | 571 | 45 | ||||||||||||||||||||||
| TX Panhandle Y1/Y2 | Texas | 100 | 249 | 78 | ||||||||||||||||||||||
* Total pipeline system is 419 miles. Phillips 66 has an ownership interest in multiple segments totaling 49 miles.
4
The following table depicts our ownership interest in terminal and storage facilities included in our Transportation business at December 31, 2025:
| Facility Name | Location | Commodity Handled | Interest | Gross Storage Capacity (MBbl) | Gross Rack Capacity (MB/D) | |||||||||||||||||||||||||||
| Albuquerque | New Mexico | Refined Petroleum Products | 100 | % | 274 | 20 | ||||||||||||||||||||||||||
| Amarillo | Texas | Refined Petroleum Products | 100 | 296 | 23 | |||||||||||||||||||||||||||
| Beaumont | Texas | Crude Oil, Refined Petroleum Products | 100 | 16,800 | 8 | |||||||||||||||||||||||||||
| Billings | Montana | Refined Petroleum Products | 100 | 81 | 12 | |||||||||||||||||||||||||||
| Billings Crude | Montana | Crude Oil | 100 | 236 | N/A | |||||||||||||||||||||||||||
| Borger | Texas | Crude Oil | 100 | 1,068 | N/A | |||||||||||||||||||||||||||
| Bozeman | Montana | Refined Petroleum Products | 100 | 134 | 5 | |||||||||||||||||||||||||||
| Buffalo Crude | Montana | Crude Oil | 100 | 303 | N/A | |||||||||||||||||||||||||||
| Casper | Wyoming | Refined Petroleum Products | 100 | 365 | 7 | |||||||||||||||||||||||||||
| Clifton Ridge | Louisiana | Crude Oil | 100 | 3,800 | N/A | |||||||||||||||||||||||||||
| Coalinga | California | Crude Oil | 100 | 817 | N/A | |||||||||||||||||||||||||||
| Colton | California | Refined Petroleum Products | 100 | 207 | 20 | |||||||||||||||||||||||||||
| Cushing | Oklahoma | Crude Oil | 100 | 675 | N/A | |||||||||||||||||||||||||||
| Cut Bank | Montana | Crude Oil | 100 | 315 | N/A | |||||||||||||||||||||||||||
| Denver | Colorado | Refined Petroleum Products | 100 | 441 | 43 | |||||||||||||||||||||||||||
| Des Moines | Iowa | Refined Petroleum Products | 50 | 217 | 12 | |||||||||||||||||||||||||||
| East St. Louis | Illinois | Refined Petroleum Products | 100 | 1,529 | 55 | |||||||||||||||||||||||||||
| Glenpool | Oklahoma | Refined Petroleum Products | 100 | 571 | 18 | |||||||||||||||||||||||||||
| Great Falls | Montana | Refined Petroleum Products | 100 | 198 | 6 | |||||||||||||||||||||||||||
| Hartford | Illinois | Refined Petroleum Products | 100 | 1,468 | 21 | |||||||||||||||||||||||||||
| Helena | Montana | Refined Petroleum Products | 100 | 195 | 5 | |||||||||||||||||||||||||||
| Jefferson City | Missouri | Refined Petroleum Products | 100 | 103 | 15 | |||||||||||||||||||||||||||
| Junction | California | Crude Oil, Refined Petroleum Products | 100 | 524 | N/A | |||||||||||||||||||||||||||
| Kansas City | Kansas | Refined Petroleum Products | 100 | 1,410 | 50 | |||||||||||||||||||||||||||
| La Junta | Colorado | Refined Petroleum Products | 100 | 99 | 5 | |||||||||||||||||||||||||||
| Lake Charles Pipeline Storage | Louisiana | Refined Petroleum Products | 50 | 3,143 | N/A | |||||||||||||||||||||||||||
| Lincoln | Nebraska | Refined Petroleum Products | 100 | 217 | 12 | |||||||||||||||||||||||||||
| Linden | New Jersey | Refined Petroleum Products | 100 | 360 | 95 | |||||||||||||||||||||||||||
| Los Angeles | California | Refined Petroleum Products | 100 | 156 | 80 | |||||||||||||||||||||||||||
| Lubbock | Texas | Refined Petroleum Products | 100 | 182 | 18 | |||||||||||||||||||||||||||
| Medford Spheres | Oklahoma | NGL | 100 | 70 | N/A | |||||||||||||||||||||||||||
| Missoula | Montana | Refined Petroleum Products | 50 | 365 | 14 | |||||||||||||||||||||||||||
| Moses Lake | Washington | Refined Petroleum Products | 50 | 216 | 10 | |||||||||||||||||||||||||||
| Mount Vernon | Missouri | Refined Petroleum Products | 100 | 365 | 40 | |||||||||||||||||||||||||||
| North Salt Lake | Utah | Refined Petroleum Products | 50 | 755 | 60 | |||||||||||||||||||||||||||
| North Spokane | Washington | Refined Petroleum Products | 100 | 492 | N/A | |||||||||||||||||||||||||||
| Odessa | Texas | Crude Oil | 100 | 521 | N/A | |||||||||||||||||||||||||||
| Oklahoma City | Oklahoma | Crude Oil, Refined Petroleum Products | 100 | 355 | 42 | |||||||||||||||||||||||||||
5
| Facility Name | Location | Commodity Handled | Interest | Gross Storage Capacity (MBbl) | Gross Rack Capacity (MB/D) | |||||||||||||||||||||||||||
| Paola | Kansas | Refined Petroleum Products | 100 | % | 978 | N/A | ||||||||||||||||||||||||||
| Pasadena | Texas | Refined Petroleum Products, NGL | 100 | 3,558 | 70 | |||||||||||||||||||||||||||
| Pecan Grove | Louisiana | Lubricant Base Stocks, Refined Petroleum Products | 100 | 177 | N/A | |||||||||||||||||||||||||||
| Ponca City | Oklahoma | Refined Petroleum Products | 100 | 63 | 22 | |||||||||||||||||||||||||||
| Ponca City Crude | Oklahoma | Crude Oil | 100 | 1,229 | N/A | |||||||||||||||||||||||||||
| Portland | Oregon | Refined Petroleum Products | 100 | 650 | 38 | |||||||||||||||||||||||||||
| Renton | Washington | Refined Petroleum Products | 100 | 243 | 19 | |||||||||||||||||||||||||||
| Richmond | California | Refined Petroleum Products | 100 | 343 | 30 | |||||||||||||||||||||||||||
| Rock Springs | Wyoming | Refined Petroleum Products | 100 | 132 | 8 | |||||||||||||||||||||||||||
| Sacramento | California | Refined Petroleum Products | 100 | 146 | 12 | |||||||||||||||||||||||||||
| Santa Margarita | California | Crude Oil | 100 | 398 | N/A | |||||||||||||||||||||||||||
| Sheridan | Wyoming | Refined Petroleum Products | 100 | 94 | 6 | |||||||||||||||||||||||||||
| Spokane | Washington | Refined Petroleum Products | 100 | 351 | 20 | |||||||||||||||||||||||||||
| Tacoma | Washington | Refined Petroleum Products | 100 | 316 | 19 | |||||||||||||||||||||||||||
| Torrance | California | Crude Oil, Refined Petroleum Products | 100 | 2,128 | N/A | |||||||||||||||||||||||||||
| Tremley Point | New Jersey | Refined Petroleum Products | 100 | 1,701 | 25 | |||||||||||||||||||||||||||
| Westlake | Louisiana | Refined Petroleum Products | 100 | 128 | 10 | |||||||||||||||||||||||||||
| Wichita Falls | Texas | Crude Oil | 100 | 225 | N/A | |||||||||||||||||||||||||||
| Wichita North | Kansas | Refined Petroleum Products | 100 | 769 | 20 | |||||||||||||||||||||||||||
| Wichita South | Kansas | Refined Petroleum Products | 100 | 272 | N/A | |||||||||||||||||||||||||||
The following table depicts our ownership interest in marine, rail and petroleum coke loading and offloading facilities included in our Transportation business at December 31, 2025:
| Facility Name | Location | Commodity Handled | Interest | Gross Loading Capacity* | ||||||||||||||||||||||
| Marine | ||||||||||||||||||||||||||
| Beaumont | Texas | Crude Oil, Refined Petroleum Products | 100 | % | 85 | |||||||||||||||||||||
| Clifton Ridge | Louisiana | Crude Oil, Refined Petroleum Products | 100 | 50 | ||||||||||||||||||||||
| Hartford | Illinois | Refined Petroleum Products | 100 | 3 | ||||||||||||||||||||||
| Pecan Grove | Louisiana | Lubricant Base Stocks, Refined Petroleum Products | 100 | 6 | ||||||||||||||||||||||
| Portland | Oregon | Refined Petroleum Products | 100 | 10 | ||||||||||||||||||||||
| Richmond | California | Refined Petroleum Products | 100 | 5 | ||||||||||||||||||||||
| Tacoma | Washington | Crude Oil | 100 | 12 | ||||||||||||||||||||||
| Tremley Point | New Jersey | Refined Petroleum Products | 100 | 7 | ||||||||||||||||||||||
| Rail | ||||||||||||||||||||||||||
| Bayway | New Jersey | Crude Oil | 100 | 75 | ||||||||||||||||||||||
| Beaumont | Texas | Crude Oil | 100 | 20 | ||||||||||||||||||||||
| Ferndale | Washington | Crude Oil | 100 | 35 | ||||||||||||||||||||||
| Missoula | Montana | Refined Petroleum Products | 50 | 41 | ||||||||||||||||||||||
| Thompson Falls | Montana | Refined Petroleum Products | 50 | 41 | ||||||||||||||||||||||
| Petroleum Coke | ||||||||||||||||||||||||||
| Lake Charles | Louisiana | Petroleum Coke | 50 | N/A | ||||||||||||||||||||||
* Marine facilities in thousands of barrels per hour (MB/h); Rail in thousands of barrels daily (MB/D).
6
Marine Vessels
At December 31, 2025, we had 28 international-flagged crude oil, refined product and NGL tankers under time charter contracts, with capacities ranging in size from 300,000 to 1,100,000 barrels. We also had a variety of inland and offshore tug/barge units. These vessels are used primarily to transport crude oil and other feedstocks, as well as refined products for our facilities. In addition, the NGL tankers are used to export propane and butane mainly from our owned facilities.
Truck and Rail
Our truck and rail fleets support our feedstock and distribution operations. Truck movements are provided through our wholly owned subsidiary, Sentinel Transportation LLC, and through numerous third-party trucking companies. Rail movements are provided via a fleet of approximately 8,900 owned or leased railcars.
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NGL
At December 31, 2025, our NGL business owned or held partial interests in a diversified and integrated portfolio of assets across the wellhead-to-market value chain. Our portfolio includes natural gas gathering and processing plants, NGL and natural gas pipeline systems, and fractionators located in the United States. A significant portion of our business is conducted through DCP LP, a consolidated subsidiary in which we hold an aggregate direct and indirect economic interest of 86.8%.
Natural Gas Gathering and Processing
DCP LP’s gathering and processing assets are strategically located in some of the major producing regions in the United States, including the Permian Basin, the Denver-Julesburg Basin (DJ), the Midcontinent and Eagle Ford. We own or hold partial interests in 35 active natural gas processing plants that have a net nameplate processing capacity of 5 billion cubic feet per day (Bcf/d).
Pipeline Systems
In 2025, we acquired the Coastal Bend assets, which include pipelines. Together with our existing pipeline systems—such as those owned by DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills), in which we hold a combined direct and indirect economic interest of 91.2%—these assets enhance takeaway capabilities for DCP LP’s gathering and processing operations in key U.S. production regions. They also provide access to customers and market outlets along the U.S. Gulf Coast, including Corpus Christi, Mont Belvieu, and our Sweeny fractionation and export facilities (known as the Sweeny Hub), all located in Texas.
Sweeny Hub Assets and NGL Fractionators
The Sweeny Hub is a U.S. Gulf Coast NGL market hub, consisting of four fractionators with an original nameplate fractionation capacity of 550,000 barrels per day (B/D), an LPG export terminal, and NGL storage caverns. As a result of engineering and optimization projects, the Sweeny Fractionators have demonstrated an expansion of nameplate capacity to fractionate 675,000 B/D. The fractionators are located adjacent to our Sweeny Refinery in Old Ocean, Texas, and supply purity ethane to the petrochemical industry and purity NGL to domestic and global markets. Raw NGL supply is delivered to the fractionators from nearby major pipelines, including the DCP Sand Hills pipeline system. The fractionators are supported by significant infrastructure including connectivity to two NGL supply pipelines, a pipeline connecting to the Mont Belvieu market hub and our Clemens Caverns storage facility with access to our LPG export terminal in Freeport, Texas. The Sweeny Hub also includes our C2G Pipeline, which is a 16-inch ethane pipeline that connects our Clemens Caverns storage facility to petrochemical facilities in Gregory, Texas, near Corpus Christi.
The Freeport LPG Export Terminal leverages our fractionation, transportation and storage infrastructure to supply petrochemical, heating and transportation markets globally. The terminal can simultaneously load a propane vessel and a butane vessel, and has demonstrated a combined LPG export capacity of 300,000 B/D. In addition, the terminal has the capability to export natural gasoline (C5+) produced by the Sweeny Hub fractionators.
In addition to the Sweeny Hub, our NGL business owns or has partial interests in facilities that fractionate raw NGL supply in complexes in Mont Belvieu, Texas and Conway, Kansas. During 2025, further enhancing our wellhead-to-market strategy, we acquired the Coastal Bend assets, including two fractionators with processing capacity of 170,000 B/D located near Corpus Christi, Texas.
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The following table depicts our ownership interest in major pipeline systems included in our NGL business at December 31, 2025:
| Name | State of Origination/Terminus | Interest | Length (Miles) | Gross Capacity (MB/D) | ||||||||||||||||||||||
| Mixed NGL (Y-Grade) | ||||||||||||||||||||||||||
| Black Lake † | Louisiana/Texas | 100 | % | 314 | 80 | |||||||||||||||||||||
| Chisholm | Oklahoma/Kansas | 50 | 202 | 42 | ||||||||||||||||||||||
| Coastal Bend | Texas | 78 | 893 | 225 | ||||||||||||||||||||||
| Front Range † | Colorado/Texas | 33 | 450 | 260 | ||||||||||||||||||||||
| Powder River | Wyoming/Colorado | 100 | 366 | 16 | ||||||||||||||||||||||
| Sand Hills †* | New Mexico/Texas | 100 | 1,433 | 500 | ||||||||||||||||||||||
| Southern Hills †* | Kansas/Texas | 100 | 940 | 192 | ||||||||||||||||||||||
| Seabreeze/Wilbreeze † | Texas | 100 | 80 | 52 | ||||||||||||||||||||||
| Sweeny NGL | Texas | 100 | 18 | 204 | ||||||||||||||||||||||
| Texas Express † | Texas | 10 | 600 | 370 | ||||||||||||||||||||||
| Wattenberg † | Colorado/Kansas | 100 | 450 | 112 | ||||||||||||||||||||||
| Purity NGL | ||||||||||||||||||||||||||
| C2G | Texas | 100 | 155 | 185 | ||||||||||||||||||||||
| Coastal Bend | Texas | 100 | 215 | 450 | ||||||||||||||||||||||
| River Parish NGL | Louisiana | 100 | 499 | 104 | ||||||||||||||||||||||
| Sweeny LPG | Texas | 100 | 260 | 1,081 | ||||||||||||||||||||||
| Natural Gas | ||||||||||||||||||||||||||
| Cheyenne Connector † | Colorado | 50 | 70 | 0.6 Bcf/d | ||||||||||||||||||||||
| Guadalupe † | Texas | Various | 600 | 0.2 Bcf/d | ||||||||||||||||||||||
† Owned by DCP LP, a consolidated subsidiary in which we hold an aggregate 86.8% direct and indirect economic interest.
* Owned by consolidated subsidiaries in which we hold an aggregate 91.2% direct and indirect economic interest, including through our economic interest held in DCP LP.
The following table depicts our ownership interest in terminal and storage facilities included in our NGL business at December 31, 2025:
| Facility Name | Location | Commodity Handled | Interest | Gross Storage Capacity (MBbl) | Gross Rack Capacity (MB/D) | |||||||||||||||||||||||||||
| Clemens | Texas | NGL | 100 | % | 17,251 | N/A | ||||||||||||||||||||||||||
| Freeport | Texas | Refined Petroleum Products, NGL | 100 | 3,485 | N/A | |||||||||||||||||||||||||||
| Marysville † | Michigan | NGL | 100 | 8,000 | N/A | |||||||||||||||||||||||||||
| River Parish | Louisiana | NGL | 100 | 438 | N/A | |||||||||||||||||||||||||||
| Spindletop † | Texas | Natural Gas | 100 | 12 Bcf | N/A | |||||||||||||||||||||||||||
† Owned by DCP LP, a consolidated subsidiary in which we hold an aggregate 86.8% direct and indirect economic interest.
The following table depicts our ownership interest in a marine facility included in our NGL business at December 31, 2025:
| Facility Name | Location | Commodity Handled | Interest | Gross Loading Capacity (MB/h) | ||||||||||||||||||||||
| Marine | ||||||||||||||||||||||||||
| Freeport | Texas | Refined Petroleum Products, NGL | 100 | % | 46 | |||||||||||||||||||||
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The following table depicts our ownership interest in NGL fractionators included in our NGL business at December 31, 2025:
| Facility Name | Location | Interest | Capacity (MB/D) | |||||||||||||||||
| Conway | Kansas | 40 | % | 43 | ||||||||||||||||
| Enterprise †* | Texas | 25 | 61 | |||||||||||||||||
| Coastal Bend Fractionators | Texas | 100 | 170 | |||||||||||||||||
| Gulf Coast Fractionators** | Texas | 23 | 33 | |||||||||||||||||
| Mont Belvieu 1 † | Texas | 20 | 32 | |||||||||||||||||
| Sweeny Fractionators | Texas | 100 | 675 | |||||||||||||||||
† Owned by DCP LP, a consolidated subsidiary in which we hold an aggregate 86.8% direct and indirect economic interest.
* Interest reflects Phillips 66’s 12.5% direct interest and DCP LP’s direct interest of 12.5%.
** Facility restarted in 2025 after being idled in December 2020.
The following table depicts our operating data in gathering and processing assets included in our NGL business at December 31, 2025:
| Regions | Plants | Approximate Gathering and Transmission Systems (Miles) | Approximate Net Nameplate Plant Capacity (MMcf/d) † | |||||||||||||||||
| North | 13 | 3,200 | 1,580 | |||||||||||||||||
| Midcontinent | 6 | 22,600 | 1,110 | |||||||||||||||||
| Permian* | 12 | 15,800 | 1,650 | |||||||||||||||||
| South | 4 | 4,400 | 690 | |||||||||||||||||
† Million cubic feet per day (MMcf/d). Includes plants owned by DCP LP, a consolidated subsidiary in which we hold an aggregate 86.8% direct and indirect economic interest.
* Includes two Dos Picos plants, with approximately 100 miles of gathering and transmission systems and 440 MMcf/d net nameplate capacity.
10
CHEMICALS
The Chemicals segment consists of our 50% equity investment in CPChem, which is headquartered in The Woodlands, Texas. At December 31, 2025, CPChem owned or had joint venture interests in 29 manufacturing facilities located in Belgium, Colombia, Qatar, Saudi Arabia and the United States. Additionally, CPChem has two research and development centers in the United States.
CPChem produces and markets ethylene and other olefin products. The ethylene produced is primarily used by CPChem to produce polyethylene, normal alpha olefins (NAO) and polyethylene pipe. CPChem manufactures and markets aromatics and styrenics products, such as benzene, cyclohexane, styrene and polystyrene, as well as a variety of specialty chemical products including organosulfur chemicals, solvents, catalysts, and chemicals used in drilling and mining.
The manufacturing of petrochemicals and plastics involves the conversion of hydrocarbon-based raw material feedstocks into higher-value products, often through a thermal process referred to in the industry as “cracking.” For example, ethylene can be produced by cracking ethane, propane, butane, natural gasoline or certain refinery liquids, such as naphtha and gas oil. Ethylene primarily is used as a raw material in the production of plastics, such as polyethylene. Plastic resins, such as polyethylene, are manufactured in a thermal/catalyst process, and the produced output is used as a further raw material for various applications, such as packaging and plastic pipe.
The following table reflects CPChem’s petrochemicals and plastics product capacities at December 31, 2025:
| Millions of Pounds per Year* | |||||||||||
| U.S. | Worldwide | ||||||||||
| Ethylene | 12,395 | 14,915 | |||||||||
| Propylene | 3,675 | 4,180 | |||||||||
| High-density polyethylene | 5,305 | 7,030 | |||||||||
| Low-density polyethylene | 620 | 620 | |||||||||
| Linear low-density polyethylene | 1,815 | 1,815 | |||||||||
| Polypropylene | — | 310 | |||||||||
| Normal alpha olefins | 2,920 | 3,435 | |||||||||
| Polyalphaolefins | 125 | 385 | |||||||||
| Polyethylene pipe | 500 | 500 | |||||||||
| Benzene | 1,600 | 2,530 | |||||||||
| Cyclohexane | 1,060 | 1,455 | |||||||||
| Styrene | 1,050 | 1,875 | |||||||||
| Polystyrene | 835 | 915 | |||||||||
| Specialty chemicals | 440 | 575 | |||||||||
| Total | 32,340 | 40,540 | |||||||||
* Capacities include CPChem’s share in equity affiliates and excludes CPChem’s NGL fractionation capacity.
CPChem and a co-venturer are building world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar. On the U.S. Gulf Coast, the Golden Triangle Polymers facility will include a 4.6 billion pounds per year ethane cracker and two high-density polyethylene units with a combined capacity of 4.4 billion pounds per year. CPChem owns a 51% equity share in the joint venture. The Ras Laffan Petrochemical facility will include a 4.6 billion pounds per year ethane cracker and two high-density polyethylene units with a total capacity of 3.7 billion pounds per year. CPChem owns a 30% equity share in the joint venture. Both facilities are expected to be fully operational in 2027.
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REFINING
The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels. At December 31, 2025, this segment included 10 refineries in the United States and Europe.
In the fourth quarter 2025, we ceased fuel production and began idling the facilities at our Los Angeles Refinery. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information. On October 1, 2025, we acquired the remaining 50% equity interest in WRB Refining LP (WRB), a joint venture that owned the Wood River and Borger refineries, from subsidiaries of Cenovus Energy Inc. (Cenovus). See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
The table below depicts information for each of our wholly owned and joint venture refineries:
| At December 31, 2025 | At January 1, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Thousands of Barrels Daily | Thousands of Barrels Daily | |||||||||||||||||||||||||||||||||||||||||||||||||
| Region/Refinery | Location | Net Clean Product Capacity** | Net Clean Product Capacity** | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Crude Throughput Capacity | Gasolines | Distillates | Clean Product Yield Capability | Net Crude Throughput Capacity | Gasolines | Distillates | Clean Product Yield Capability | |||||||||||||||||||||||||||||||||||||||||||
| Atlantic Basin/Europe | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Bayway | Linden, NJ | 258 | 157 | 130 | 93 | % | 275 | 157 | 130 | 93 | % | |||||||||||||||||||||||||||||||||||||||
| Humber | N. Lincolnshire, United Kingdom | 221 | 95 | 115 | 81 | 221 | 95 | 115 | 85 | |||||||||||||||||||||||||||||||||||||||||
| MiRO* | Karlsruhe, Germany | 58 | 25 | 27 | 87 | 58 | 25 | 27 | 87 | |||||||||||||||||||||||||||||||||||||||||
| 537 | 554 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Gulf Coast | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Lake Charles | Westlake, LA | 264 | 105 | 122 | 72 | 264 | 105 | 122 | 76 | |||||||||||||||||||||||||||||||||||||||||
| Sweeny | Old Ocean, TX | 265 | 158 | 125 | 86 | 277 | 158 | 125 | 86 | |||||||||||||||||||||||||||||||||||||||||
| 529 | 541 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Central Corridor | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ponca City | Ponca City, OK | 217 | 120 | 100 | 93 | 228 | 125 | 105 | 95 | |||||||||||||||||||||||||||||||||||||||||
| Billings | Billings, MT | 66 | 37 | 30 | 90 | 71 | 40 | 35 | 94 | |||||||||||||||||||||||||||||||||||||||||
| Wood River | Roxana, IL | 345 | 176 | 140 | 81 | 345 | 176 | 140 | 85 | |||||||||||||||||||||||||||||||||||||||||
| Borger | Borger, TX | 149 | 100 | 70 | 91 | 149 | 100 | 70 | 95 | |||||||||||||||||||||||||||||||||||||||||
| 777 | 793 | |||||||||||||||||||||||||||||||||||||||||||||||||
| West Coast | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ferndale | Ferndale, WA | 105 | 65 | 39 | 90 | 105 | 65 | 39 | 90 | |||||||||||||||||||||||||||||||||||||||||
| 105 | 105 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 1,948 | 1,993 | |||||||||||||||||||||||||||||||||||||||||||||||||
* Mineraloelraffinerie Oberrhein GmbH, joint venture in which we own an 18.75% interest.
** Clean product capacities are maximum rates for each clean product category, independent of each other. They are not additive when calculating the clean product yield capability for each refinery.
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Primary crude oil characteristics and sources of crude oil for our wholly owned and joint venture refineries are as follows:
| Characteristics | Sources | |||||||||||||||||||||||||||||||
| Sweet | Medium Sour | Heavy Sour | High TAN* | United States | Canada | South and Central America | Europe | Middle East & Africa | ||||||||||||||||||||||||
| Bayway | l | l | l | l | l | |||||||||||||||||||||||||||
| Humber | l | l | l | l | l | l | ||||||||||||||||||||||||||
| MiRO | l | l | l | l | l | l | ||||||||||||||||||||||||||
| Lake Charles | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||
| Sweeny | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||
| Ponca City | l | l | l | l | l | |||||||||||||||||||||||||||
| Billings | l | l | l | l | l | |||||||||||||||||||||||||||
| Wood River | l | l | l | l | l | l | ||||||||||||||||||||||||||
| Borger | l | l | l | l | l | l | ||||||||||||||||||||||||||
| Ferndale | l | l | l | l | l | l | ||||||||||||||||||||||||||
* High TAN (Total Acid Number): acid content greater than or equal to 1.0 milligram of potassium hydroxide (KOH) per gram.
Atlantic Basin/Europe Region
Bayway Refinery
The Bayway Refinery is located on the New York Harbor in Linden, New Jersey. Bayway’s facilities include crude distilling, naphtha reforming, fluid catalytic cracking, solvent deasphalting, hydrodesulfurization and alkylation units. The complex also includes a polypropylene plant with the capacity to produce up to 775 million pounds per year. The refinery produces a high percentage of transportation fuels, as well as petrochemical feedstocks, residual fuel oil and home heating oil. Refined petroleum products are distributed to East Coast customers by pipeline, barge and railcar.
Humber Refinery
The Humber Refinery is located on the east coast of England in North Lincolnshire, United Kingdom, approximately 180 miles north of London. Humber’s facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, thermal cracking and delayed coking units. The facilities include a specialty coker and calciner. Humber is the only refinery in the United Kingdom with coking facilities, and a producer of high-quality specialty graphite and anode-grade petroleum cokes. The refinery also produces a high percentage of transportation fuels. The majority of the gasoline and diesel produced by the refinery are distributed to customers in the United Kingdom by pipeline, barge, railcar and truck. Additionally, refined products are exported to customers throughout the world by waterborne vessel.
MiRO Refinery
The MiRO Refinery is located on the Rhine River in Karlsruhe, Germany, approximately 95 miles south of Frankfurt, Germany. MiRO is the largest refinery in Germany and operates as a joint venture in which we own an 18.75% interest. Facilities include crude distilling, naphtha reforming, fluid catalytic cracking, petroleum coking and calcining, hydrodesulfurization, isomerization, ethyl tert-butyl ether and alkylation units. MiRO produces a high percentage of transportation fuels. Other products produced include petrochemical feedstocks, home heating oil, bitumen, and anode- and fuel-grade petroleum cokes. Refined petroleum products are distributed to customers in Germany, Switzerland, France, and Austria by truck, railcar and barge.
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Gulf Coast Region
Lake Charles Refinery
The Lake Charles Refinery is located in Westlake, Louisiana, approximately 150 miles east of Houston, Texas. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrocracking, hydrodesulfurization, isomerization and delayed coking units. Refinery facilities also include a specialty coker and calciner. The refinery produces a high percentage of transportation fuels. Other products produced include off-road diesel, home heating oil, gas oil and hydrogen feedstock for our Excel Paralubes LLC (Excel Paralubes) joint venture in our M&S segment, and high-quality specialty graphite and fuel-grade petroleum cokes. A majority of the refined petroleum products are distributed to customers in the southeastern and eastern United States by truck, railcar, barge or major common carrier pipelines. Additionally, refined petroleum products are exported to customers primarily in Latin America by waterborne vessel.
Sweeny Refinery
The Sweeny Refinery is located in Old Ocean, Texas, approximately 65 miles southwest of Houston, Texas. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, aromatics units, a vacuum distillation unit, and a delayed coking unit. The refinery produces a high percentage of transportation fuels, as well as petrochemical feedstocks, home heating oil and fuel-grade petroleum coke. A majority of the refined petroleum products are distributed to customers throughout the Midcontinent region, southeastern and eastern United States by pipeline, barge and railcar. Additionally, refined petroleum products are exported to customers primarily in Latin America by waterborne vessel.
Central Corridor Region
Ponca City Refinery
The Ponca City Refinery is located in Ponca City, Oklahoma, approximately 95 miles northwest of Tulsa, Oklahoma. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, and delayed coking units. The refinery produces a high percentage of transportation fuels, as well as anode-grade petroleum coke. Refined petroleum products are primarily distributed to customers throughout the Midcontinent region by company-owned and common carrier pipelines.
Billings Refinery
The Billings Refinery is located in Billings, Montana. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization and delayed coking units. The refinery produces a high percentage of transportation fuels, as well as fuel-grade petroleum coke. Refined petroleum products are distributed to customers in Montana, Wyoming, Idaho, Utah, Colorado and Washington by pipeline, railcar and truck.
WRB Refining LP
On October 1, 2025, we acquired the remaining 50% equity interest in WRB from Cenovus. Prior to October 1, 2025, we were the operator and managing partner of WRB. See Note 5—Business Combinations for additional information.
•Wood River Refinery
The Wood River Refinery is located in Roxana, Illinois, about 15 miles northeast of St. Louis, Missouri, at the confluence of the Mississippi and Missouri rivers. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrocracking, hydrodesulfurization and delayed coking units. The refinery produces a high percentage of transportation fuels, as well as petrochemical feedstocks, asphalt and fuel-grade petroleum coke. Refined petroleum products are distributed to customers throughout the Midcontinent region by pipeline, railcar, barge and truck.
•Borger Refinery
The Borger Refinery is located in Borger, Texas, in the Texas Panhandle, approximately 50 miles north of Amarillo, Texas. Refinery facilities include crude distilling, naphtha reforming, fluid catalytic cracking, alkylation, hydrodesulfurization, and delayed coking units. The refinery produces a high percentage of transportation fuels, as well as fuel-grade petroleum coke, NGL and solvents. Refined petroleum products are distributed to customers in West Texas, New Mexico, Colorado and the Midcontinent region by company-owned and common carrier pipelines.
14
West Coast Region
Ferndale Refinery
The Ferndale Refinery is located on Puget Sound in Ferndale, Washington, approximately 20 miles south of the U.S.-Canada border. Facilities include crude distillation, naphtha reforming, fluid catalytic cracking, alkylation and hydrodesulfurization units. The refinery produces a high percentage of transportation fuels, as well as residual fuel oil, which is supplied to the northwest marine bunker fuel market. Most of the refined petroleum products are distributed to customers in the northwest United States by pipeline and barge.
Los Angeles Refinery
In the fourth quarter of 2025, consistent with our plan, we began idling the facilities and ceased fuel production. Full idling of all units will be completed over the coming months. We have submitted redevelopment project applications for both facilities, initiating the review process and allowing us to continue pursuing the redevelopment of the property for future uses. While we pursue these approvals, we plan to maintain all operating permits and hold units in a safe, clean and well-maintained state. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information. Effective in the first quarter of 2026, activities associated with decommissioning and redeveloping the facilities will be included in Corporate and Other.
The Los Angeles Refinery consists of two facilities linked by pipeline located five miles apart in Carson and Wilmington, California, approximately 15 miles southeast of Los Angeles. Prior to the facility idling, the Carson facility served as the front end of the refinery by processing crude oil, and the Wilmington facility served as the back end of the refinery by upgrading the intermediate products to finished products. Historically, the refinery facilities included crude distillation, naphtha reforming, fluid catalytic cracking, alkylation, hydrocracking, and delayed coking units. The refinery produced a high percentage of transportation fuels, including California Air Resources Board (CARB)-grade gasoline. Refined petroleum products were distributed to customers in California, Nevada and Arizona by pipeline and truck.
15
MARKETING AND SPECIALTIES
The M&S segment purchases for resale and markets refined products, such as gasoline, distillates and aviation fuels, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of specialty products, such as base oils and lubricants.
Marketing
Marketing—United States
We market gasoline, diesel and aviation fuel through marketer and joint venture outlets that utilize our brands, including Phillips 66, Conoco and 76. At December 31, 2025, we had approximately 7,620 branded outlets in 48 states. Additionally, we hold brand licensing agreements covering approximately 40 sites in various U.S. territories.
Our wholesale operations utilize a network of marketers operating approximately 5,360 outlets. We place a strong emphasis on the wholesale channel of trade because of its relatively lower capital requirements. In addition, we hold brand-licensing agreements covering approximately 1,460 sites. Our refined products are marketed on both a branded and unbranded basis. A high percentage of our branded marketing sales are in the Midcontinent, Rockies and West Coast regions. Our wholesale marketing network is supplied by products produced at our refineries or by products purchased from other domestic and international sources. We also utilize consignment fuel arrangements with several marketers whereby we own the fuel inventory and pay the marketers a monthly fee.
In the Gulf Coast and East Coast regions, most sales are conducted via the unbranded channel of trade, which does not require a highly integrated marketing network to secure petroleum product placement for refinery pull through. We have export capability at our U.S. coastal refineries to meet international demand.
In addition to automotive gasoline and diesel, we produce and market aviation gasoline and jet fuel. Aviation gasoline and jet fuel are sold through dealers and independent marketers at approximately 800 Phillips 66 branded locations. Our network also includes assets for the domestic placement of renewable diesel.
We participate in joint ventures engaged in retail convenience store operations in the West Coast, as well as the Midcontinent and Rockies regions. These joint ventures enable us to secure long-term placement of our refinery production and participate in the retail value chain. At December 31, 2025, our retail joint ventures had approximately 780 outlets.
16
Marketing—International
In the United Kingdom we utilize the JET brand name to market retail and some wholesale products and at December 31, 2025, we had approximately 320 marketing outlets, of which 11 were company owned and approximately 310 were dealer owned. Additionally, we hold a 35% interest in approximately 960 predominantly JET-branded sites, which are located in Germany and Austria. This interest is held through a newly formed entity, JET Management Holding GmbH & Co. KG (JET Management Holding) which was formed on December 1, 2025. We also hold brand licensing agreements covering approximately 50 sites in Mexico.
We also market aviation fuels, LPG, heating oils, marine bunker fuels, and other secondary refined products to commercial customers and into the bulk or spot markets in the United Kingdom.
Significant Dispositions
On December 1, 2025, we divested 65% of our interest in Germany and Austria retail marketing business and retained a 35% non-operating equity interest through JET Management Holding.
On January 31, 2025, we sold our 49% ownership interest in Coop Mineraloel AG, a joint venture that markets refined petroleum products in Switzerland.
See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the above dispositions.
Specialties
Lubricants
We manufacture and sell automotive, commercial, industrial and specialty lubricants which are marketed worldwide under the Phillips 66, Kendall, Red Line and other private label brands.
In addition, we own a 50% interest in Excel Paralubes, an operated joint venture that owns a hydrocracked lubricant base oil manufacturing plant located adjacent to the Lake Charles Refinery. The facility has capacity to produce 22,200 B/D of high-quality Group II clear hydrocracked base oils. Excel Paralubes markets the produced base oil under the Pure Performance brand. The facility’s feedstock is sourced primarily from our Lake Charles Refinery.
17
RENEWABLE FUELS
The Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable diesel, renewable jet fuel and other renewable fuels.
Rodeo Complex
The Rodeo Complex can process approximately 50,000 B/D (800 million gallons per year) of renewable feedstocks, such as used cooking oil, vegetable oils and other low-carbon intensity waste oils and byproducts, into renewable fuels, including renewable diesel and renewable jet fuel. The renewable fuel production is primarily distributed to customers in California, Oregon and Washington.
During 2025, we completed a 30.2 megawatt solar facility within the Rodeo Complex. The solar facility reduces Rodeo Complex’s grid power demand by 50% and is expected to avoid approximately 33,000 metric tons a year of carbon dioxide, based on the U.S. Environmental Protection Agency’s (EPA’s) AVoided Emissions and geneRation Tool.
We have also continued to expand our Sustainable Aviation blueprint through a growing customer base and agreements with multiple airlines. In November 2025, we entered into an agreement to supply approximately 83 million gallons of sustainable aviation fuel (SAF) over three years to an international air cargo logistics company. The SAF in this agreement is expected to reduce life-cycle greenhouse gas emissions by approximately 737,000 metric tons compared to conventional jet fuel over the agreement period.
European Renewables
Our renewables value chain in the United Kingdom (European Renewables) globally sources a wide range of renewable feedstocks, including used cooking oil, for co-processing at the Humber Refinery, as well as for supplying products to the market, such as sustainable aviation fuel. In addition, European Renewables supplies renewable feedstocks, including tallow, to the Rodeo Complex.
ENERGY RESEARCH & INNOVATION
Our Energy Research & Innovation organization, located in Bartlesville, Oklahoma, includes scientists and engineers working in laboratories and pilot plants on our 440-acre research campus to develop technical solutions focused on advancing our business and solving tomorrow’s energy challenges. Areas of focus include feedstock characterization, renewables processing, and process optimization to enhance margins and reliability in our Refining, Midstream, M&S and Renewable Fuels segments.
HUMAN CAPITAL
Phillips 66 employees, our human capital, are guided by our values of safety, honor and commitment. Together, we operate as a high-performing organization by building breadth and depth in capabilities, pursuing excellence and doing the right thing. We empower our people to create and innovate, and to work in ways that are designed to enable us to deliver industry leading performance. At December 31, 2025, we had approximately 12,600 employees working toward our mission of providing energy and improving lives and our vision to be the leading integrated downstream energy provider.
We believe maintaining and enhancing a high-performing organization is critical to our success. Our employees promote our culture and are integral to achieving our strategic priorities and maximizing long-term shareholder value. We strive for continuous improvement of our high-performing organization, as we believe that our employees differentiate us in the marketplace.
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The human capital measures and objectives that we focus on in managing our business and that we believe are important to understand our business, include:
•Safety—Safety is foundational to our business. We endeavor to protect the health and safety of everyone who has a role in our operations and the communities in which we operate. We employ rigorous employee training and audit programs to drive ongoing improvement in personal safety as we strive for zero incidents. Under the variable cash incentive program, our personal safety performance is measured by Injuries from Serious Incidents (ISI) rate and maintaining an industry-leading Total Recordable Rate (TRR). ISI focuses on incidents with potential for more severe consequences and TRR measures the number of incidents per 200,000 hours worked. In 2025, our ISI rate was 0.018 and our combined workforce TRR was 0.11.
•Culture—Phillips 66 cultivates a culture where people lead with purpose and operate with accountability. “Our Energy in Action” behaviors—working for the greater good; creating an environment of trust; seeking different perspectives; and pursuing excellence—are integrated in how we lead, make decisions, and deliver results.
We routinely capture real time sentiment through engagement surveys and listening mechanisms that help leadership understand progress and pinpoint opportunities to enhance the employee experience.
•Capability—We build enterprise capability by expanding both depth and breadth of critical skills needed for Phillips 66’s future. This includes technical capability, accelerating leadership readiness and developing talent through rotational experiences, targeted development programs, and career pathways aligned with our evolving business strategy. Our performance and talent practices provide insights to strengths, opportunities, and future potential, enabling a more personalized development and better workforce planning.
We strive to take a systematic approach to capability, ensuring that learning, leadership development, talent reviews, and career mobility work together to create a high-performing, future-ready workforce.
Additionally, we strive to maintain a comprehensive, future-focused approach to enterprise talent management. This includes succession planning for critical roles, building a diverse leadership pipeline, assessing readiness, and identifying development experiences that accelerate leadership capability.
Our integrated talent processes—succession, talent reviews, leadership assessment, and strategic workforce planning—ensure we have the right people, with the right skills, in the right roles to advance our long-term shareholder value.
•Performance—We are committed to delivering exemplary and sustainable results by aligning our people, processes, and priorities to the company’s strategic goals. “Our Energy in Action” and leadership competencies are embedded into the ways we assess performance, ensuring leaders and teams deliver outcomes, model our behaviors, and drive excellence.
Additionally, “High Performing Organization” is one of the metrics used in our annual variable cash incentive program. In assessing “High Performing Organization,” we measure the progress we make towards achieving our strategic priorities, and in areas such as culture, engagement, talent, technology, human capital management, and our organization’s agility to adapt and respond to challenges, changing market conditions and other external factors.
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COMPETITION
Our businesses operate in a competitive environment. Elements of competition for each of our Chemicals, Refining and Renewable Fuels segments include product improvement, new product development, low-cost structures, ability to source and run adequate and high-quality feedstocks, and efficient manufacturing and distribution systems. In the M&S segment, competitive factors include product properties, reliability of supply, customer service, price and credit terms, advertising and sales promotion, and development of customer loyalty to branded products. In the Midstream segment, our crude oil and refined petroleum products pipelines face competition related primarily to quality of customer service and reliability, competitive rates. the proximity of assets to customers and market hubs. In addition, the Midstream segment competes to deliver natural gas and NGL to customers. Principal methods of competing include economically securing the right to purchase raw natural gas for gathering systems, managing the pressure of those systems, operating efficient NGL and gas processing plants and securing placement for the products produced.
GENERAL
At December 31, 2025, we held a total of 583 active patents in 18 countries worldwide, including 445 active U.S. patents. The overall profitability of any operating segment is not dependent on any single patent, trademark, license or franchise.
In support of our goal to attain zero incidents, we seek to mitigate risks across the enterprise through a comprehensive Health, Safety and Environmental (HSE) management system that systematically identifies, assesses and manages risks to safeguard employees, contractors and the environment. Its focus is ongoing risk identification, prioritization and control while promoting continuous improvement in implementing HSE policies, meeting leadership expectations and upholding our core values. We strive for operating excellence by integrating our health, occupational safety, process safety and environmental principles throughout our business with a commitment to pursue continuous improvement.
We are subject to various federal laws and government regulations concerning environmental matters and employee safety and health in the United States and other countries. In addition, many state and local governments have adopted environmental and employee safety and health laws and regulations, some of which are similar to federal requirements. State and federal authorities may seek fines and penalties for violating these laws and regulations. The material effects of compliance with these government regulations upon our capital expenditures, earnings and competitive position are primarily associated with environmental regulations. See the environmental information contained in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources and Liquidity—Contingencies” under the captions “Environmental” and “Climate Change.” It includes information on expensed and capitalized environmental costs for 2025 and those expected for 2026 and 2027.
Website Access to Reports
Our Internet website address is http://www.phillips66.com. Information contained on our Internet website is not part of this Annual Report.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available on our website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC). Alternatively, you may access these reports at the SEC’s website at http://www.sec.gov.
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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. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we do not currently consider to present significant risks to our operations. 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.
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.
Similar to other companies in the industries in which we operate, our financial results are largely affected by the relationship, or margin, between the prices at which we sell refined petroleum, petrochemical, plastics and renewable fuels products and the prices for crude oil, natural gas, NGL, renewable feedstocks and other feedstocks used in manufacturing these products. Historically, margins have been volatile and the industry in which we operate is cyclical in nature, and we expect such volatility and cyclicality to continue.
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.
Also, supply contracts generally have market-based pricing provisions. We normally purchase our feedstocks weeks before manufacturing and selling the refined products. We also purchase refined products produced by others for sale to our customers. 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.
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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. 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.
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. The prices for crude oil, other feedstocks and refined products can fluctuate based on global, regional and local market conditions, as well as by type and class of products, which can reduce margins and have a significant impact on our refining, wholesale marketing and retail operations, revenues, operating income and cash flows. 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.
In addition, sustained periods of low commodity prices can result in upstream producers significantly curtailing their oil and gas drilling operations, which could substantially delay the production and delivery of volumes of crude oil, natural gas and NGL and negatively impact the results of our Midstream, Refining, and M&S segments. For example, the volume of crude oil and refined petroleum products transported or stored in our pipelines and terminal facilities depends on the demand for and availability of crude oil and refined petroleum products in the areas serviced by our assets. Likewise, our earnings and cash flows would be negatively impacted by a period of sustained lower demand for refined petroleum products, which could lead to lower refinery utilization and result in a decrease in the volumes of refined petroleum product transported through our pipelines and terminal facilities.
If a decrease in commodity prices results in declining oil and gas production, then demand for services provided by our Midstream segment may be negatively impacted. The natural gas and NGL gathered, processed, transported, sold and stored by us is delivered into pipelines for further delivery to end-users, including fractionation facilities. Our revenues and cash flows can also increase or decrease as the price of natural gas and NGL fluctuates because of certain contractual arrangements whereby natural gas is purchased for an agreed percentage of proceeds from the sale of the residue gas and/or NGL resulting from processing activities.
Lower commodity prices also affect our Chemicals segment, which uses feedstocks that are derivatively produced in the processing of natural gas and refining of crude oil. Those feedstock prices can fluctuate widely for a variety of reasons, including changes in worldwide energy prices and the supply and availability of feedstocks. Due to the highly competitive nature of most of the products sold by our Chemicals segment, market position cannot necessarily be protected by product differentiation or by passing on cost increases to customers. As a result, price increases in raw materials may not correlate with changes in the prices at which petrochemical and plastics products are sold, thereby negatively affecting margins and the results of operations of our Chemicals segment.
Additionally, our Renewable Fuels segment is affected by prices and demand for renewable feedstocks. Sustained periods of low prices for renewable fuels or renewable feedstocks due to decreases in demand or production of renewable fuels products could have a material adverse effect on the results of operations of our Renewable Fuels segment.
Sustained or prolonged declines in commodity prices and other feedstocks may adversely affect our results of operations, liquidity, access to the capital markets, and our ability to fund our capital priorities, including share repurchases and dividends.
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.
The regulatory framework regarding renewable feedstocks and fuels is constantly evolving. Changes to laws, regulations, policies or standards regarding renewable fuels or the feedstocks used to produce our renewable fuels, elimination or
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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. 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.
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. 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. Additionally, the availability of natural gas and electricity necessary to operate our assets can be affected by weather, pipeline interruptions, grid outages, and logistics disruptions, which may also cause us to temporarily curtail or shut down operations.
Although we take precautions to ensure and enhance the safety of our operations and minimize the risk of disruptions, our operations are subject to the hazards inherent in chemicals, refining and midstream businesses, such as explosions, fires, refinery, processing facility or pipeline releases or other incidents, power outages, labor disputes, global health crises, restrictive governmental regulation or other natural or man-made disasters, such as geopolitical conflicts and acts of terrorism, including cyber intrusion. The inability to operate facilities or assets due to any of these events could significantly impair our ability to manufacture, process, store or transport products.
Any casualty occurrence involving our assets or operations could result in serious personal injury or loss of human life, significant damage to property and equipment, environmental pollution, impairment of operations and substantial losses to us. For assets located near populated areas, including residential areas, commercial business centers, industrial sites and other public gathering areas, the level of damage resulting from these risks could be greater. Damages resulting from an incident involving any of our assets or operations may result in our being named as a defendant in one or more lawsuits asserting potentially substantial claims or in our being assessed potentially substantial remediation fines or penalties by governmental authorities. Should any of these risks materialize at any of our equity affiliates, it could have a material adverse effect on the business and financial condition of the equity affiliate and negatively impact their ability to make future distributions to us.
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.
We often utilize the services of third parties to transport crude oil or other feedstocks, NGL, refined petroleum and renewable fuels products to and from our facilities. In addition to our own operational risks, we could experience interruptions of supply or increases in costs to deliver our products to market if the ability to transport is disrupted because of weather events, natural disasters, accidents, governmental regulations, public health crises, armed hostilities, or third-party actions, including protests. A prolonged disruption in our ability to transport crude oil or other feedstocks, NGL, refined petroleum or renewable fuels products to or from one or more of our refineries or other facilities could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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. 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. 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. 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.
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Our investments in joint ventures decrease our ability to manage risk.
We conduct some of our operations, including parts of our Midstream, Refining and M&S segments, and our entire Chemicals segment, through joint ventures in which we share control with our joint venture partners. Our joint venture partners may have economic, business or legal interests or goals that are inconsistent with ours or those of the joint venture, or our joint venture participants may be unable to meet their economic or other obligations, and we may be required to fulfill those obligations alone. Failure by us, or an entity in which we have a joint venture interest, to adequately manage the risks associated with any acquisitions or joint ventures could have a material adverse effect on the financial condition or results of operations of our joint ventures and, in turn, our business and operations.
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.
Even if a virus or other illness does not spread significantly, the perceived risk of infection or health risk may result in reduced demand for our products and materially affect our business. As we cannot predict the duration or scope of any future public health crisis, epidemic or pandemic, the negative financial impact to our results cannot be reasonably estimated and could be material. Factors that will influence the impact on our business and operations include the duration and extent of such events, including the virulence of the infection, the timing of vaccine development and distribution across the world and its impact on economic recovery, the extent of imposed or recommended containment and mitigation measures, including travel restrictions, and their impact on our operations, and the general economic consequences of public health crises, epidemics and pandemics.
To the extent any public health crisis, epidemic or pandemic adversely affected or affects our business and financial results, it may also have the effect of heightening many of the other risks that could adversely affect our business described in this Annual Report, such as risks associated with industry capacity utilization, volatility in the price and availability of raw materials, supply chain interruptions, material adverse changes in customer relationships including any failure of a customer to perform its obligations under agreements with us, and risks associated with worldwide or regional economic conditions.
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. We compete with many companies for available supplies of crude oil and other feedstocks and for outlets for our refined products. We do not produce any of our crude oil feedstocks. Some of our competitors, however, obtain a portion of their feedstocks from their own production and some have more extensive retail outlets than we have. 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.
Some of our competitors also have materially greater financial and other resources than we have. Such competitors have a greater ability to bear the economic risks inherent in all aspects 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.
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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 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. 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. 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. 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.
We and our affiliates have made and continue to make significant investments to meet market demand for our products and services, such as investments in midstream infrastructure and construction of new petrochemicals facilities. Similar investments have been made, and additional investments may be made in the future, by us, our competitors or by new entrants to the markets and industries we serve. The success of these investments largely depends on the realization of anticipated market demand, and these projects typically require significant development periods, during which time demand for our products or services may change, or additional investments by competitors may be made that could result in an overbuild of supply. Any of these or other competitive forces could materially adversely affect our results of operations, financial position or cash flows, as well as our return on capital employed.
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.
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. Most large-scale projects take several years to complete. During this multi-year period, the political and regulatory environments or other market conditions can change from those we anticipated, and these changes could be significant. Supply chain disruptions may also delay projects or increase costs. 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.
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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. Such risks could adversely impact our business and results of operations.
Certain of our plans are based upon the assumption that societal sentiment will continue to enable, and existing regulations will remain in place to allow for, the future development, transportation and use of petroleum-based and renewables-based fuels. A portion of our growth strategy is dependent on our and our joint ventures’ ability to capture growth opportunities in the Midstream, Renewable Fuels and Chemicals segments. Regulatory policy decisions relating to the production, refining, transportation, marketing and use of petroleum-based and renewables-based fuels are subject to political pressures and the influence and protests of environmental and other special interest groups. For example, the construction or expansion of pipelines can involve numerous regulatory, permitting, environmental, political, and legal uncertainties, many of which are beyond our control. We may not be able to identify or execute growth projects, and those that are identified may not be completed on schedule or at the budgeted cost, if at all. In addition, our revenues may not increase immediately upon the expenditure of funds on a particular project. Delays or cost increases related to capital spending programs or the inability to complete growth projects could negatively impact our reputation, results of operations, cash flows and our return on capital employed.
Our Energy Research & Innovation organization works to develop new technologies and solutions focused on advancing our business units, including renewable fuels research. Our efforts to research and develop new technologies are subject to a multitude of factors and conditions, many of which are out of our control. Examples of such factors include evolving government regulation, the pace of changes in technology (including with respect to generative artificial intelligence), the successful development and deployment of existing or new technologies and business solutions on a commercial scale, competition from third parties in developing new technologies and the availability, timing and cost of equipment. The occurrence of these factors may delay or increase the cost of our efforts, which could negatively impact our reputation, results of operations, cash flows and our return on capital employed.
Political and economic developments could affect our operations and materially reduce our profitability and cash flows.
Actions of federal, state, local and international governments through legislation or regulation, executive order, permit or other review of infrastructure or facility development, and commercial restrictions could delay projects, increase costs, limit development, or otherwise reduce our profitability both in the United States and abroad. 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.
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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 CEC is currently in rulemaking with respect to various aspects of SBx 1-2, and the potential implementation of a financial penalty or any restrictions or delays on our ability to undertake turnaround or other maintenance activities creates uncertainty due to the potential adverse effects on our refining, marketing, renewable and midstream operations in California, which may be material to our results of operations, financial condition, profitability and cash flows.
We anticipate that other jurisdictions may contemplate similarly focused legislation or actions. The timing and impacts of SBx 1-2 and any other similarly focused legislation or actions are subject to considerable uncertainty due to a number of factors, including technological and economic feasibility, legal challenges, and potential changes in law, regulation, or policy, and it is not currently possible to predict the ultimate effects of these matters and developments, but they may be significant. 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.
Furthermore, the U.S. government can prevent or restrict us from doing business in foreign countries and from doing business with entities affiliated with foreign governments, which can include state oil companies and U.S. subsidiaries of those companies. The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security matters. The effect of any such OFAC sanctions could disrupt transactions with or operations involving entities affiliated with sanctioned countries, and could limit our ability to obtain optimum crude slates and other feedstocks and effectively distribute refined products. 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.
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. Other political and economic risks include global health crises; financial market turmoil; economic volatility and global economic slowdown; currency exchange rate fluctuations; short-term and long-term inflationary pressures; rising or prolonged periods of high interest rates; import or export restrictions and changes in trade regulations; supply chain disruptions; civil unrest and other political risks; limitations in the availability of labor to develop, staff and manage operations; and potentially adverse tax developments. If any of these events occur, our businesses and results of operations may be adversely affected.
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.
Part of our strategy includes capturing growth opportunities in our businesses to further advance our participation in the energy transition and meet our greenhouse gas (GHG) emissions intensity reduction targets. This strategy depends, in part, on our ability to successfully identify and evaluate acquisition and investment opportunities and develop and commercialize new technologies. The number of lower-carbon opportunities may be limited, and we will compete with other energy companies for these limited opportunities, which could make them more expensive and the returns for our business less attractive and possibly cause us to refrain from making certain investments at all. Further, certain lower-carbon opportunities will depend on technological and other advancements that may not be within our control and may not come to fruition or be economically feasible in the near term. 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.
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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. The availability and continuation of public policy support mechanisms will drive a significant part of the economics and viability of lower-carbon and clean energy investments generally, as well as our participation in them. If we are unable to identify and consummate acquisitions and investments that meet our minimum returns hurdle, our ability to execute a portion of our growth strategy and meet our environmental goals may be impeded.
Our business could be negatively impacted as a result of shareholder activism.
Publicly traded companies are increasingly subject to campaigns by activist shareholders advocating corporate actions such as operational, governance or management changes, or sales of assets or entire segments. 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. The actions of activist shareholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals or prospects of our business. In addition, responding to the actions of activist shareholders can be costly and time-consuming, disrupting our business and diverting the attention of our Board of Directors and management from pursuing our business strategies.
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.
From time to time, we are party to or otherwise involved in actual or threatened litigation, claims, governmental inspections or investigations and other legal matters arising out of our operations in the normal course of business or otherwise. We are currently involved in various legal proceedings that are not yet fully resolved, and additional claims may arise in the future. The outcomes of these matters are inherently unpredictable and subject to significant uncertainties. Additionally, the recent trend of outside investment in legal claims has enabled plaintiffs to reduce their exposure to risk and pursue final verdicts for claims that may in the past have settled. Determining legal reserves or possible losses for ongoing legal proceedings involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes. Until the final resolution of such matters, we may be exposed to losses in excess of the amount recorded, and such amounts could be material and may exceed any applicable insurance coverage. 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.
The potential physical effects of climate change and severe weather, as well as other chronic physical effects such as water shortages and rising sea levels, on our operations are highly uncertain and depend upon the unique geographic and environmental factors present. We have systems in place to manage potential acute physical risks, including those that may be caused by climate change, but such events could have an adverse effect on our assets and operations. Examples of potential physical risks include floods, hurricane-force winds, severe storms, droughts, heat waves, earthquakes, wildfires, freezing temperatures and snowstorms, as well as rising sea levels at our coastal facilities. We have incurred, and will continue to incur, costs to protect our assets from physical risks and to employ processes, to the extent available, to mitigate such risks.
We operate facilities located in coastal regions of the United States, which have been impacted by hurricanes that have required us to temporarily, or even permanently, shut down operations at those sites. CPChem also operates facilities on the Gulf Coast and has had to temporarily shut down sites in the past as a result of hurricanes. Any extreme weather events or rising sea levels may disrupt the ability to operate our facilities located near coastal areas or to transport crude oil, refined petroleum or petrochemical and plastics products in these areas. Extended periods of such disruption could have an adverse effect on our results of operations. We could also incur substantial costs to prevent or repair damage to these facilities. 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.
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There are certain environmental hazards and risks inherent in our operations that could adversely affect those operations and our financial results.
The operation of facilities, such as refineries, power plants, fractionators, pipelines, terminals and vessels is inherently subject to the risks of spills, discharges or other inadvertent releases of petroleum, refined product or hazardous substances. If any of these events had previously occurred or occurs in the future in connection with the operation or maintenance of any of our assets, or in connection with any facilities that receive our wastes or byproducts for treatment or disposal, other than events for which we are indemnified, we could be liable for all costs and penalties associated with their remediation under federal, state, local and international environmental laws or at common law, and could be liable for property damage to third parties caused by contamination from releases and spills.
We expect to continue to incur substantial capital expenditures and operating costs to comply with existing and future environmental laws and regulations.
Our business is subject to numerous laws and regulations relating to the protection of the environment. These laws and regulations continue to increase in both number and complexity and affect our operations with respect to, among other things:
•The discharge of pollutants into the environment.
•Emissions into the atmosphere, such as nitrogen oxides, sulfur dioxide and mercury emissions, and GHG emissions, as they are, or may become, regulated.
•The quantity of renewable fuels that must be blended into motor fuels.
•The handling, use, storage, transportation, disposal and cleanup of hazardous materials and hazardous and nonhazardous wastes.
•The dismantlement and abandonment of our facilities and restoration of our properties at the end of their useful lives.
To the extent these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our business, financial condition, results of operations and cash flows in future periods could be materially adversely affected.
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. These include actions to develop international, federal, regional or statewide programs, which could require reductions in our GHG or other emissions, establish a carbon tax and decrease the demand for our refined products. Requiring reductions in these emissions could result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls at our facilities and (iii) administer and manage any emissions programs, including acquiring emission credits or allotments.
International climate change-related efforts, such as the 2015 United Nations Conference on Climate Change, which led to the creation of the Paris Agreement, and the 2023 United Nations Climate Change Conference, may impact the regulatory framework of states whose policies directly influence our present and future operations. 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. 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.
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States have been and are expected to continue to adopt new and amended legislative and regulatory measures regarding climate change and GHG emissions controls. For example, in 2017, the California state legislature adopted Assembly Bill 398, which provides direction and parameters on utilizing cap and trade after 2020 to meet the 40% reduction target for GHG emissions from 1990 levels by 2030 specified in Senate Bill 32. Compliance with the cap and trade program is demonstrated through a market-based credit system. Additionally, in 2022, the CARB adopted regulations that effectively ban the in-state sales of new cars containing internal combustion engines beginning in 2035. 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. Other states are proposing, or have already promulgated, low carbon fuel standards or similar initiatives to reduce emissions from the transportation sector. If we are unable to pass the costs of compliance on to our customers, sufficient credits are unavailable for purchase, we have to pay a significantly higher price for credits, or if we are otherwise unable to meet our compliance obligation, our financial condition and results of operations could be adversely affected. 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. 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. Increasing concerns about climate change and carbon intensity have resulted in heightened societal awareness and a number of international and national measures to limit GHG emissions. We cannot determine what final regulations will be enacted, modified or reversed, or whether stricter investor pressure can be expected in the future. Any of these changes may have a material adverse impact on our business or financial condition.
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.
Most of the crude oil and natural gas production of our Midstream segment’s customers is being produced from unconventional oil shale reservoirs. These reservoirs require hydraulic fracturing completion processes to release the hydrocarbons from the rock so they can flow through casing to the surface. Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into a formation to stimulate hydrocarbon production. The EPA, as well as several state agencies, commenced studies and/or convened hearings regarding the potential environmental impacts of hydraulic fracturing activities. At the same time, certain environmental groups have suggested that additional laws may be needed to more closely and uniformly regulate the hydraulic fracturing process, and legislation has been proposed to provide for such regulation. In addition, some communities have adopted measures to ban hydraulic fracturing in their communities.
Also, certain interest groups have proposed ballot initiatives and constitutional amendments designed to restrict crude oil and natural gas development. If ballot initiatives, local, state, or national restrictions or prohibitions are adopted and result in more stringent limitations on the production and development of crude oil and natural gas, we may incur significant costs to comply with the requirements, and producers may experience delays or curtailment in the permitting or pursuit of exploration, development or production activities. Such compliance costs and delays, curtailments, limitations or prohibitions could have a material adverse effect on our business, prospects, results of operations, financial condition and liquidity. In addition to these proposed ballot initiatives and constitutional amendments, municipalities, such as the City of Los Angeles, have already enacted or contemplate enacting complete or partial bans on oil and gas exploration and production activities.
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.
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Compliance with the EPA’s Renewable Fuel Standard (RFS) could adversely affect our financial results.
The EPA has implemented the RFS pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007. The RFS program sets annual renewable volume obligation (RVO) requirements for the quantity of renewable fuels, such as ethanol, that must be blended into motor fuels consumed in the United States. To provide certain flexibility in compliance options available to the industry, a Renewable Identification Number (RIN) is assigned to each gallon of renewable fuel produced in, or imported into, the United States. As a producer of petroleum-based motor fuels, we are obligated to blend renewable fuels into the products we produce at a rate that is at least commensurate to the EPA’s RVO requirements and, to the extent we do not, we must purchase RINs in the open market to satisfy our obligation under the RFS program.
We are exposed to the volatility in the market price of RINs. We cannot predict the future prices of RINs. RINs prices are dependent upon a variety of factors, including EPA regulations, the availability of RINs for purchase, and levels of transportation fuels produced, which can vary significantly from quarter to quarter. If sufficient RINs are unavailable for purchase, if we have to pay a significantly higher price for RINs, if we purchase RINs that are ultimately determined to be invalid, or if we are otherwise unable to meet the EPA’s RVO requirements, including because the EPA mandates a blending quantity of renewable fuel that exceeds the amount that is commercially feasible to blend into motor fuel (a situation commonly referred to as “the blend wall”), our operations could be materially adversely impacted, up to and including a reduction in produced motor fuel for sale in the United States. These factors could result in a material adverse effect on our financial position, results of operations or cash flows.
Societal, technological, political and scientific developments around emissions and fuel efficiency may decrease demand for petroleum-based fuels.
Developments aimed at reducing GHG emissions may decrease the demand or increase the cost for our petroleum-based fuels. Societal attitudes toward these products and their relationship to the environment may significantly affect our effectiveness in marketing our 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. Advanced technology and increased use of vehicles that do not use petroleum-based transportation fuels or that are powered by hybrid engines would reduce demand for the motor fuel we produce. We may also incur increased production costs, which we may not be able to pass along to our customers.
Additionally, renewable fuels, alternative energy mandates and energy conservation efforts could reduce demand for refined petroleum products. Tax incentives and other subsidies can make renewable fuels and alternative energy more competitive with refined petroleum products than they otherwise might be, which may reduce refined petroleum product margins and hinder the ability of refined petroleum products to compete with renewable fuels. The competition for renewable fuels feedstocks may also increase, negatively impacting the availability of such feedstocks or increasing their cost. These developments could potentially have a material adverse effect on our business, financial condition, results of operations and cash flows.
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. 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. 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.
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
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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. 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. Lawsuits and/or regulatory proceedings or actions of this nature could result in interruptions to construction or operations of current or future projects, delays in completing those projects and/or increased project costs, all of which may have a material adverse effect on our business, financial condition, results of operation and cash flows.
These risks may result in unexpected costs, negative sentiments about our company, disruptions in our operations, increases to our operating expenses and reduced demand for our products, which in turn could have an adverse effect on our business, financial condition and results of operations.
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.
There is a growing concern with the accumulation of plastic, including microplastics, and other packaging waste in the environment. Additionally, plastics have faced increased public backlash and scrutiny. Policy measures to address this concern are being discussed or implemented by governments at all levels. 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. Increased regulation of, or prohibition on, the use of certain plastic products could reduce demand for certain products CPChem produces, which could negatively impact its financial condition, results of operations and cash flows, thereby negatively impacting our equity earnings by reducing the cash distributions that we receive from CPChem.
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.
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. Any such incidents could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such unauthorized access, disclosure or other loss of information could result in one or more of the following outcomes: (i) unauthorized access to or a loss or misuse of intellectual property, proprietary information, or employee, customer or vendor data; (ii) public disclosure of sensitive information; (iii) increased costs to prevent, respond to, or mitigate cybersecurity events, such as deploying additional personnel and protection technologies, training employees, and engaging third-party experts and consultants; (iv) systems interruption; (v) disruption of our business operations; (vi) remediation costs for repairs of system damage, or regulatory fines or penalties; (vii) reputational damage that adversely affects customer or investor confidence; (viii) exposure to legal liability; and (ix) damage to our competitiveness, stock price, and long-term shareholder value. 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.
We 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. Although we devote significant resources to prevent cybersecurity incidents and protect our system and data, we have experienced actual and attempted cybersecurity incidents. 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.
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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.). 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, and, 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 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.
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. 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. Requirements related to operational technology, supply chain security, data governance and timely disclosure of cyber incidents are becoming more prescriptive, and additional rulemaking may further expand our compliance obligations. As cyber threats targeting the energy sector grow in frequency and sophistication, we are required to devote additional resources to maintain and enhance our cybersecurity programs and controls. Failure to comply with applicable cybersecurity laws and regulations, or to effectively identify, prevent or respond to a cyber event, could result in operational disruptions, increased costs, regulatory enforcement actions or adverse effects on our business.
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.
Our ability to obtain credit and capital depends in large measure on the state of the credit and capital markets, which is subject to factors beyond our control. Our ability to access credit and capital markets may be restricted at a time when we would like, or need, access to those markets, which could constrain our flexibility to react to changing economic and business conditions. In addition, the cost and availability of debt and equity financing may be adversely impacted by unstable or illiquid market conditions. Protracted uncertainty and illiquidity in these markets also could have an adverse impact on our lenders, commodity transaction counterparties, or our customers, preventing them from meeting their obligations to us.
From time to time, our cash needs may exceed our available cash and our business could be materially and adversely affected if we are unable to supplement the cash generated from our operations with proceeds from financing activities. Uncertainty and illiquidity in financial markets may materially impact the ability of the participating financial institutions to fund their commitments to us under our liquidity facilities that are supported by a broad syndicate of financial institutions. Accordingly, we may not be able to obtain the full amount of the funds available under our liquidity facilities to satisfy our cash requirements, and our failure to do so could have a material adverse effect on our operations and financial position.
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.
There have been efforts in recent years aimed at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities, and other groups, to promote the divestment of fossil fuel companies, as well as to pressure lenders, insurers, and other financial services companies to limit or curtail activities with fossil fuel companies. 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.
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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. 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. 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. Further, an increasing number of regulators and lawmakers have pursued contrary views, enforcement actions, or investigations, including those that aim to limit the consideration of E&S factors in investment decisions, which may expose us to additional legal, financial, or reputational risks.
Our efforts to accurately report on E&S-related issues expose us to operational, reputational, financial, legal, and other risks. Standards for tracking and reporting on E&S-related matters, including climate-related matters, have not been harmonized and continue to evolve. 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.
Our published GHG emissions intensity reduction goals and other E&S targets we may set in the future could negatively impact our business.
We have announced targets to reduce our Scope 1 and Scope 2 GHG emissions intensity from our operations by 30% and Scope 3 GHG emissions intensity of our energy products by 15% by 2030, and a target to reduce our Scope 1 and Scope 2 GHG emissions intensity by 50% by 2050, in each case as compared to baseline 2019 levels. 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. 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. In addition, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting GHG emissions, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
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.
We do not fully insure against all potential losses, including those from extreme weather events or natural disasters, and, therefore, our business, financial condition, results of operations and cash flows could be adversely affected by unexpected or underinsured liabilities and increased costs.
We maintain insurance coverage in amounts we believe to be prudent, including against many, but not all, potential liabilities arising from operating hazards. 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.
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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. If a rating agency were to downgrade our rating below investment grade, our borrowing costs would increase, and our funding sources could decrease. 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. For example, Phillips 66’s agreement with Chevron Corporation (Chevron) regarding CPChem permits Chevron to buy Phillips 66’s 50% interest in CPChem for fair market value if Phillips 66 experiences a change in control or if both Standard & Poor’s Financial Services LLC and Moody’s Investors Service, Inc. lower their credit ratings below investment grade and the credit rating from either rating agency remains below investment grade for 365 days thereafter, with fair market value determined by agreement or by nationally recognized investment banks. 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.
Assumptions used in determining projected benefit obligations and the expected return on plan assets for our pension plans and other postretirement benefit plans are evaluated by us based on a variety of independent sources of market information and in consultation with outside actuaries. If we determine that changes are warranted in the assumptions used, such as the discount rate, expected long-term rate of return, or health care cost trend rate, our future pension and postretirement benefit expenses and funding requirements could increase. In addition, several factors could cause actual results to differ significantly from the actuarial assumptions that we use. Funding obligations are determined based on the value of assets and liabilities on a specific date as required under relevant regulations. Future pension funding requirements, and the timing of funding payments, could be affected by legislation enacted by governmental authorities.
We may incur losses as a result of our forward contracts and derivative transactions.
We currently use commodity derivative instruments, and we expect to use them in the future. If the instruments we utilize to hedge our exposure to various types of risk are not effective, we may incur losses. Derivative transactions involve the risk that counterparties may be unable to satisfy their obligations to us. The risk of counterparty default is heightened in a poor economic environment. In addition, we may be required to incur additional costs in connection with future regulation of derivative instruments to the extent it is applicable to us.
We are subject to continuing contingent liabilities of ConocoPhillips following the separation. Further, ConocoPhillips has indemnified us for certain matters, but may not be able to satisfy its obligations to us in the future.
In connection with our separation from ConocoPhillips in 2012, we entered into an Indemnification and Release Agreement and certain other agreements pursuant to which ConocoPhillips agreed to indemnify us for certain liabilities, and we agreed to indemnify ConocoPhillips for certain liabilities. Indemnities that we may be required to provide are not subject to any cap and may be significant. Third parties could also seek to hold us responsible for any of the liabilities that ConocoPhillips has agreed to retain. Further, the indemnity from ConocoPhillips may not be sufficient to protect us against the full amount of such liabilities, and ConocoPhillips may not be able to fully satisfy its indemnification obligations. Each of these risks could negatively affect our business, results of operations and financial condition.
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Item 1B. UNRESOLVED STAFF COMMENTS
None.
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. 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.
Cybersecurity Governance
Board of Directors
Management
Risk Management and Strategy
Third‑Party Risk Management
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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. 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.
Materiality and Disclosure Practices
Item 3. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation and claims arising out of our operations in the normal course of business. Additionally, we have elected a $1 million threshold to disclose certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings. 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.
Further, our U.S. refineries are implementing two separate consent decrees, regarding alleged violations of the Federal Clean Air Act, with the EPA, five states and one local air pollution agency. Some of the requirements and limitations contained in the decrees provide for stipulated penalties for violations. Stipulated penalties under the decrees are not automatic, but must be requested by one of the agency signatories. As part of periodic reports under the decrees or other reports required by permits or regulations, we occasionally report matters that could be subject to a request for stipulated penalties. 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.
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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. 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. 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.
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. (Propel Fuels) filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. 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. 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. 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. 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. 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. 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. 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.
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.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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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. 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. 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. 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. 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. Baldridge 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. 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. Allen Sutherland is Executive Vice President, Government Affairs, General Counsel and Corporate Secretary, a position she has held since January 2022. 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.
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PART II
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.
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. The graph also compares our cumulative TSR against (i) our self-constructed Peer Group (defined below) and (ii) the S&P 500 Index, in each case upon the same assumptions for the same period. We evaluate our Peer Group on an annual basis and believe the Peer Group closely aligns with our size and lines of business. Our Peer Group is weighted according to the respective issuers’ stock market capitalization at the beginning of each period for which a return is indicated.
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. Additionally, HollyFrontier Corporation was included as a peer for periods prior to its acquisition by HF Sinclair Corporation in March 2022.
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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. Our share repurchase authorizations do not expire. Any future share repurchases will be made at the discretion of management and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans. Shares of stock repurchased are held as treasury shares. | ||||||||||||||||||||
Item 6. [RESERVED]
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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis is the company’s analysis of its financial performance, financial condition, and significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report.
The term “earnings” as used in Management’s Discussion and Analysis refers to net income attributable to Phillips 66. The terms “results,” “before-tax income” or “before-tax loss” as used in Management’s Discussion and Analysis refer to income (loss) before income taxes.
EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT
Phillips 66 is uniquely positioned as a 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. We funded capital expenditures and investments of $2.2 billion, completed acquisitions of $3.5 billion, net of cash acquired and received proceeds from asset dispositions of $3.5 billion. We paid $1.2 billion to repurchase common stock and $1.9 billion to fund dividends on our common stock. Additionally, we paid $0.4 billion of debt repayments, net of proceeds from debt issuances. We ended 2025 with $1.1 billion of cash and cash equivalents and $5.7 billion of total committed capacity available under our credit facilities.
Strategic Priorities
In January 2025, we announced the next phase of the company’s strategic priorities along with financial and operational performance targets through year-end 2027. These targets demonstrate the company’s continued focus on world-class operations; disciplined growth and returns; financial strength and flexibility and shareholder returns.
•World-Class Operations – We are focused on operational and cost reduction targets driving world-class operations across our portfolio. Optimizing utilization rates and product yield at our refineries through reliable and safe operations will enable us to capture the value available in the market in terms of prices and margins. We remain focused on a competitive cost structure and plan to enhance Refining segment returns and increase our utilization rates by focusing on low-capital, higher-return projects that increase asset reliability and improve market capture.
▪We continue to focus on Refining performance, targeting an annual clean product yield of greater than 86%, crude oil capacity utilization rates higher than industry average and continuing to improve our competitive cost structure. During 2025, our worldwide refining crude oil capacity average utilization rate was 94% for 2025, and our worldwide refining clean product yield was 87%.
▪During the fourth quarter of 2025, we ceased fuel production and began idling the facilities at our Los Angeles Refinery.
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•Disciplined Growth and Returns – A disciplined capital allocation process ensures we make investments that are expected to generate competitive returns. Our strategy remains focused on growing our Midstream and Chemicals businesses. Within our Midstream segment, we are primarily focused on maximizing the value of our fully integrated natural gas liquids (NGL) wellhead-to-market value chain.
▪In 2025, we funded capital expenditures and investments of $2.2 billion and completed a Midstream acquisition of $2.2 billion. We also acquired the remaining 50% interest in WRB Refining LP (WRB) for $1.3 billion, which will enable full integration with our broader value chain and expand our position in the Central Corridor region. This growth was achieved in part through $3.5 billion in proceeds from asset dispositions, including $1.7 billion from the sale of 65% of our interest in Germany and Austria retail marketing business (Germany and Austria Marketing), $1.2 billion from the sale of our 49% interest in Coop Mineraloel AG (Coop), and $853 million from the sale of DCP Midstream, LP’s (DCP LP) 25% ownership in Gulf Coast Express Pipeline LLC (GCX). See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information. See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information on the investment dispositions.
▪We budgeted $2.4 billion for 2026 capital expenditures and investments, exclusive of acquisitions and our share of capital spending by equity affiliates. This includes $1.3 billion of growth capital, primarily in our Midstream segment.
▪During 2025, we continued the expansion of our Midstream NGL wellhead-to-market platform through acquiring all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP (collectively referred to herein as Coastal Bend), together with their respective subsidiaries, which own various long haul NGL pipelines, fractionation facilities and distribution systems. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
▪Our financial targets through 2027 reflect our plans to organically grow our Midstream and Chemicals businesses, as well as maintain total annual capital expenditures and investments of approximately $2.5 billion, including capital related to WRB following the consolidation on October 1, 2025.
•Financial Strength and Flexibility – We use a variety of funding sources to support our liquidity requirements, including cash from operations, debt and proceeds from dispositions. Our focus remains on protecting the stable cash generation from the Midstream and M&S businesses while evaluating future opportunities to optimize our portfolio.
▪During 2025, we used available cash and proceeds from asset dispositions and debt offerings to fund capital expenditures and investments, repurchase shares of our common stock and pay dividends on our common stock.
▪We are targeting reductions of total debt to $17 billion and reductions of our debt-to-capital ratio by the end of 2027.
•Shareholder Returns – We believe shareholder value is enhanced through, among other things, a secure, competitive and growing dividend, complemented by share repurchases. 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. This amount and timing of future dividend payments and the level and timing of future share repurchases is subject to the discretion of, and approval by, our Board of Directors and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans.
▪In February 2026, our Board of Directors declared a quarterly cash dividend of $1.27 per common share, representing a $0.07 increase, reflecting our commitment to a secure, competitive and growing dividend.
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Business Environment
The Midstream segment includes our Transportation and NGL businesses. Our Transportation business contains fee-based operations not directly exposed to commodity price risk. Our NGL business contains both fee-based operations and operations directly impacted by NGL and natural gas prices. The weighted-average NGL price was $0.64 per gallon during 2025, compared with $0.68 per gallon during 2024. The Henry Hub natural gas price was $3.54 per million British thermal units (MMBtu) during 2025, compared with $2.24 per MMBtu during 2024. The decrease in NGL prices was primarily due to increased supply, while the increase in natural gas prices was due to increased liquified natural gas exports as U.S. export infrastructure increases.
The Chemicals segment consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The chemicals and plastics industry is mainly a commodity-based industry where the margins for key products are based on supply and demand, as well as cost factors. The benchmark high-density polyethylene chain margin was 7.1 cents per pound in 2025, compared with 17.7 cents per pound in 2024. The decrease was mainly due to higher ethane prices, partially driven by rising natural gas prices, and continued industry oversupply from capacity additions.
Our Refining segment results are driven by several factors, including market crack spreads, refinery throughput, feedstock costs, product yields, turnaround activity, and other operating costs. Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil. The composite 3:2:1 market crack spread for our business increased to an average of $20.42 per barrel during 2025, from an average of $16.95 per barrel in 2024. The increase in the composite market crack spread was primarily driven by stronger petroleum diesel demand, supported by low seasonal inventories, and lower crude prices. The price of U.S. benchmark crude oil, West Texas Intermediate at Cushing, Oklahoma, decreased to an average of $64.89 per barrel during 2025, from an average of $75.83 per barrel in 2024. The decrease in crude oil prices was primarily driven by increased global production, including production in the United States.
Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined products. While marketing fuel and lubricant margins are primarily driven by market factors, largely determined by the relationship between supply and demand, marketing fuel margins, in particular, are influenced by trends in spot prices, and where applicable, retail prices for refined products in the regions and countries where we operate.
Our Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Renewable Energy Complex (Rodeo Complex) and at our Humber Refinery. In addition, this segment includes global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels. 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.
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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 increase in 2025 was primarily due to a before-tax aggregate gain of $1.9 billion associated with the partial sale of Germany and Austria Marketing in December 2025, improved realized refining margins, primarily driven by higher market crack spreads, as well as a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in January 2025 in the M&S segment. These increases were partially offset by a before-tax impairment of $948 million recognized in the third quarter of 2025, related to our equity method investment in WRB, as well as lower equity earnings from CPChem.
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. The decrease in 2024 was primarily due to a decline in realized refining margins mainly driven by lower market crack spreads, partially offset by lower income tax expense.
See the “Segment Results” section for additional information on our segment results, Note 9—Investments, Loans and Long-Term Receivables, Note 25—Income Taxes, in the Notes to Consolidated Financial Statements for additional information.
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Statement of Income Analysis
2025 vs. 2024
Sales and other operating revenues decreased 8%, primarily due to lower prices for crude oil, refined petroleum products, and NGL, partially offset by higher crude oil, NGL, renewable diesel, and renewable jet fuel sales volumes. Purchased crude oil and products decreased 11% in 2025, primarily due to lower prices for crude oil, refined petroleum products, and NGL, partially offset by higher crude oil and NGL product purchase volumes.
Equity in earnings of affiliates decreased 57% in 2025, primarily due to lower equity earnings from CPChem and Excel Paralubes LLC (Excel Paralubes) as a result of decreased margins. The decrease in 2025 was additionally impacted by lower equity earnings from the sales of ownership interests in Coop and GCX in January 2025, as well as lower equity earnings from WRB prior to our acquisition on October 1, 2025, due to lower refining margins. See the Chemicals segment analysis in the “Segment Results” section for additional information regarding CPChem. See Note 9—Investments, Loans and Long-Term Receivables, and Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information regarding the sales of ownership interests and WRB acquisition, respectively.
Net gain on dispositions increased $2,663 million in 2025, primarily due to a before-tax gain of $1.9 billion associated with the partial sale of Germany and Austria Marketing in December 2025, as well as a before-tax gain of $1 billion associated with the sale of our investment in Coop in January 2025, both recognized in the M&S segment. These increases were partially offset by the absence of a before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024, associated with the sale of our ownership interest in Rockies Express Pipeline LLC (REX). See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the dispositions.
Other income increased $195 million in 2025, primarily due to the recognition of Clean Fuel Production credits beginning in 2025.
Operating expenses increased $484 million in 2025, primarily due to our acquisitions of WRB in October 2025 and Coastal Bend in April 2025. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
Selling, general and administrative expenses decreased 13% in 2025, mainly driven by an accrual of $605 million recorded in 2024 related to litigation with Propel Fuels, Inc. (Propel Fuels), compared with $262 million recorded in 2025 related to the same matter. See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information.
Depreciation and amortization increased 38% in 2025, primarily due to accelerated depreciation for the Los Angeles Refinery, as well as additional depreciation on the assets from the Coastal Bend acquisition in April 2025. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for information regarding the cessation of fuel production and idling of the Los Angeles Refinery and Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for information regarding the Coastal Bend acquisition.
Impairments increased $604 million in 2025, primarily due to the before-tax impairment of $948 million related to our equity method investment in WRB recognized in the third quarter of 2025. This was partially offset by a before-tax impairment of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas and a before-tax impairment of $163 million recognized in the first quarter of 2024 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.
Taxes other than income taxes increased $462 million in 2025, primarily due to the expiration of the Biodiesel Blender Tax Credit as of December 31, 2024.
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Interest and debt expense increased 15% in 2025, primarily driven by higher average debt balances. See Note 15—Debt, in the Notes to Consolidated Financial Statements for additional information regarding our debt issuances and repayments.
Income tax expense increased 78% in 2025, primarily due to higher income before income taxes. See Note 25—Income Taxes, in the Notes to Consolidated Financial Statements for additional information regarding our income taxes.
Net income attributable to noncontrolling interests increased $67 million in 2025, due to improved results from DCP LP, including a gain on sale of DCP LP’s equity investment in GCX in January 2025. See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information.
2024 vs. 2023
Sales and other operating revenues decreased 3%, primarily due to lower prices for refined petroleum products and crude oil, partially offset by an increase in prices for NGL. Purchased crude oil and products increased 1% in 2024, primarily due to higher refined product purchase volumes, partially offset by lower prices for refined petroleum products.
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. These decreases were partially offset by higher equity earnings from CPChem. See the Chemicals segment analysis in the “Segment Results” section for additional information.
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. 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.
Other income decreased 32% in 2024, primarily due to lower interest income as a result of lower cash balances and decreased results from trading activities. These decreases were partially offset by an increase in the fair value of our investment in NOVONIX.
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. See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.
Depreciation and amortization increased 20% in 2024, primarily due to $253 million of accelerated depreciation recorded in 2024 associated with our plan to cease operations at our Los Angeles Refinery during the fourth quarter of 2025, as well as depreciation and amortization associated with the startup of additional production capacity at the Rodeo Complex. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for information regarding the idling of our Los Angeles Refinery.
Impairments increased $432 million in 2024, primarily due to before-tax impairments recorded in our Midstream segment of certain gathering and processing assets in Texas, an equity investment in a crude pipeline in Oklahoma and certain crude gathering assets in Texas. 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.
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.
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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.
Net income attributable to noncontrolling interests decreased 74% in 2024. The decrease primarily reflects the impacts of the acquisition of all publicly held common units of DCP LP in June 2023 (DCP LP Merger), as well as the impacts of before-tax impairments reported in our Midstream segment related to certain DCP LP gathering and processing assets in Texas. 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.
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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. Includes 100% of DCP Midstream Class A Segment and Phillips 66’s direct interest in DCP Sand Hills and DCP Southern Hills.
†Includes volumes from the Coastal Bend acquisition, effective April 1, 2025. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
The Midstream segment provides crude oil and refined petroleum product transportation, terminaling and processing services; natural gas and NGL gathering, processing, transportation, fractionation, storage export and marketing services.
2025 vs. 2024
Results from our Midstream segment increased $179 million in 2025, compared with 2024.
Results from our Transportation business decreased $374 million in 2025, compared with 2024. The decrease in 2025 was primarily due to the impacts from the sale of our ownership interest in REX in the second quarter of 2024, lower equity earnings from Dakota Access, LLC and the retirement of a rail rack at the Los Angeles Refinery.
Results from our NGL business increased $553 million in 2025, compared with 2024. The increase was due to a before-tax impairment charge recognized in 2024 associated with certain gathering and processing assets in Texas and results from the Coastal Bend operations acquired in April 2025. Additionally, the increase in 2025 was impacted by a before-tax gain from the sale of DCP LP’s ownership interest in GCX in January 2025, increased gathering and processing activity in the Permian region associated with our acquisition of Pinnacle Midland Parent LLC (herein referred to as Dos Picos), and improved export activity. These increases were partially offset by a before-tax impairment charge of $79 million related to our equity investment in an NGL pipeline in Texas in the fourth quarter of 2025.
See the “Executive Overview and Business Environment” section for information on market factors impacting 2025 results. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for further information regarding Coastal Bend and Dos Picos acquisitions. See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information regarding the sale of ownership interests. See Note 12—Impairments, in the Notes to Consolidated Financial Statements for further information regarding impairments.
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2024 vs. 2023
Results from our Midstream segment decreased $181 million in 2024, compared with 2023.
Results from our Transportation business decreased $18 million in 2024, compared with 2023. The decrease in 2024 was primarily due to before-tax impairments totaling $122 million, partially offset by an increase in before-tax gains on sales of assets. We sold our ownership interest in REX in 2024 and recorded a before-tax gain of $238 million, compared to before-tax gains recorded in 2023 associated with the sales of our ownership interests in the South Texas Gateway Terminal and the Belle Chasse Terminal which totaled $137 million.
Results from our NGL business decreased $163 million in 2024, compared with 2023. The decrease was primarily due to before-tax impairment charges recognized in 2024 associated with certain gathering and processing assets in Texas, as well as unfavorable pricing driven by falling natural gas prices and winter weather impacts. These decreases were partially offset by improved pipeline volumes and higher liquefied petroleum gas cargo volumes and margins.
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 12—Impairments, in the Notes to Consolidated Financial Statements for further information regarding impairments.
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Chemicals
| Year Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Millions of Dollars | |||||||||||||||||
| Income Before Income Taxes | $ | 297 | 876 | 600 | |||||||||||||
| Millions of Pounds | |||||||||||||||||
| CPChem Externally Marketed Sales Volumes* | 25,194 | 24,088 | 23,798 | ||||||||||||||
| * Represents 100% of CPChem’s outside sales of produced petrochemical products, as well as commission sales from equity affiliates. | |||||||||||||||||
| Olefins and Polyolefins Capacity Utilization (percent) | 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. CPChem produces and markets ethylene and other olefin products. Ethylene produced is primarily consumed within CPChem for the production of polyethylene, normal alpha olefins and polyethylene pipe. CPChem manufactures and/or markets aromatics and styrenics products, such as benzene, cyclohexane, styrene and polystyrene, as well as manufactures and/or markets a variety of specialty chemical products. Unless otherwise noted, amounts referenced below reflect our net 50% interest in CPChem.
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.
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. 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.
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Refining
| Year Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Millions of Dollars | |||||||||||||||||
| Income (Loss) Before Income Taxes | |||||||||||||||||
| Atlantic Basin/Europe | $ | 402 | (59) | 816 | |||||||||||||
| Gulf Coast | 139 | (68) | 1,744 | ||||||||||||||
| Central Corridor* | 433 | 670 | 2,241 | ||||||||||||||
| West Coast | (1,248) | (908) | 539 | ||||||||||||||
| Worldwide | $ | (274) | (365) | 5,340 | |||||||||||||
| Dollars Per Barrel | |||||||||||||||||
| Income (Loss) Before Income Taxes | |||||||||||||||||
| Atlantic Basin/Europe | $ | 2.09 | (0.30) | 4.48 | |||||||||||||
| Gulf Coast | 0.72 | (0.35) | 8.44 | ||||||||||||||
| Central Corridor* | 2.70 | 6.18 | 21.81 | ||||||||||||||
| West Coast | (16.99) | (10.38) | 4.63 | ||||||||||||||
| Worldwide | (0.44) | (0.62) | 8.78 | ||||||||||||||
| Realized Refining Margins** | |||||||||||||||||
| Atlantic Basin/Europe | $ | 10.18 | 7.42 | 12.80 | |||||||||||||
| Gulf Coast | 8.86 | 7.68 | 15.67 | ||||||||||||||
| Central Corridor* | 13.26 | 11.52 | 22.50 | ||||||||||||||
| West Coast | 10.86 | 8.50 | 18.95 | ||||||||||||||
| Worldwide | 10.88 | 8.84 | 17.26 | ||||||||||||||
* Includes our proportional share of our equity method investment in WRB through September 30, 2025. Beginning on October 1, 2025, 100% of Borger Refinery and Wood River Refinery are included in consolidated results. Refer to Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
** See the “Non-GAAP Reconciliations” section for a reconciliation of this non-GAAP measure to the most directly comparable measure under generally accepted accounting principles in the United States (GAAP), income (loss) before income taxes per barrel.
On October 1, 2025, we acquired the remaining 50% ownership interest in WRB from subsidiaries of Cenovus Energy Inc. (Cenovus) for total cash consideration of $1.3 billion, subject to post-closing adjustments. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
In the fourth quarter of 2025, we ceased fuel production at our Los Angeles Refinery. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information. In early 2024, we ceased crude operations at the San Francisco Refinery as part of the conversion of the refinery into the Rodeo Complex.
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| Thousands of Barrels Daily | |||||||||||||||||
| Year Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating Statistics | |||||||||||||||||
| Refining operations* | |||||||||||||||||
| Atlantic Basin/Europe | |||||||||||||||||
| Crude Oil Capacity | 537 | 537 | 537 | ||||||||||||||
| Crude Oil Processed | 492 | 502 | 479 | ||||||||||||||
| Capacity Utilization (percent) | 92 | % | 93 | 89 | |||||||||||||
| Refinery Production | 529 | 540 | 502 | ||||||||||||||
| Gulf Coast | |||||||||||||||||
| Crude Oil Capacity | 529 | 529 | 529 | ||||||||||||||
| Crude Oil Processed | 472 | 483 | 511 | ||||||||||||||
| Capacity Utilization (percent) | 89 | % | 91 | 97 | |||||||||||||
| Refinery Production | 532 | 542 | 574 | ||||||||||||||
| Central Corridor** | |||||||||||||||||
| Crude Oil Capacity | 593 | 531 | 531 | ||||||||||||||
| Crude Oil Processed | 606 | 529 | 477 | ||||||||||||||
| Capacity Utilization (percent) | 102 | % | 100 | 90 | |||||||||||||
| Refinery Production | 633 | 551 | 497 | ||||||||||||||
| West Coast*** | |||||||||||||||||
| Crude Oil Capacity | 209 | 244 | 313 | ||||||||||||||
| Crude Oil Processed | 193 | 229 | 299 | ||||||||||||||
| Capacity Utilization (percent) | 93 | % | 94 | 95 | |||||||||||||
| Refinery Production | 199 | 238 | 319 | ||||||||||||||
| Worldwide | |||||||||||||||||
| Crude Oil Capacity | 1,868 | 1,841 | 1,910 | ||||||||||||||
| Crude Oil Processed | 1,763 | 1,743 | 1,766 | ||||||||||||||
| Capacity Utilization (percent) | 94 | % | 95 | 92 | |||||||||||||
| Refinery Production | 1,893 | 1,871 | 1,892 | ||||||||||||||
| * Includes our share of equity affiliates. | |||||||||||||||||
** Includes our proportional share of our equity method investment in WRB through September 30, 2025. Beginning on October 1, 2025, 100% of Borger Refinery and Wood River Refinery are included in consolidated results. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information. | |||||||||||||||||
*** In the fourth quarter 2025, we ceased fuel production and began idling the facilities at our Los Angeles Refinery, and the associated crude oil capacity is excluded from the statistics above beginning on October 1, 2025. Additionally, as part of our plans to convert the San Francisco Refinery into a renewable fuels facility, in the first quarter of 2023, we ceased operations at the Santa Maria facility in Arroyo Grande, California, which reduced net crude throughput capacity from 120 MB/D to 75 MB/D. In October 2023, we further reduced net crude throughput capacity from 75 MB/D to 52 MB/D as we shut down one of the two crude units at the Rodeo facility. The Rodeo facility’s net crude throughput capacity of 52 MB/D prior to shutdown was excluded from the 2024 operating statistics above. | |||||||||||||||||
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. The increase was driven by higher realized margins, higher volumes, and benefits associated with claims and settlements. The increase in realized margin was primarily due to improved market crack spreads, partially offset by weaker product differentials, and higher Renewable Identification Number (RIN) costs. Additionally, the increase in 2025 was partially offset by a before-tax impairment of $948 million related to our equity method investment in WRB recorded in the third quarter of 2025, and accelerated depreciation for the Los Angeles Refinery.
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Our worldwide refining crude oil capacity utilization rate was 94% and 95% in 2025 and 2024, respectively. See the “Executive Overview and Business Environment” section for information on industry crack spreads and other market factors impacting this year’s results. See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information related to accelerated depreciation. See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding the impairment of our equity method investment in WRB.
2024 vs. 2023
Results from the Refining segment decreased $5,705 million in 2024, compared with 2023. The decrease was primarily due to lower realized margins as a result of declining market crack spreads.
Our worldwide refining crude oil capacity utilization rate was 95% and 92% in 2024 and 2023, respectively.
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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. | |||||||||||||||||
| 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. | |||||||||||||||||
| 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. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.
2025 vs. 2024
Before-tax income from the M&S segment increased $3.5 billion in 2025, compared with 2024. The increase in 2025 was primarily driven by a before-tax aggregate gain of $1.9 billion associated with the partial sale of Germany and Austria Marketing in December 2025, a before-tax gain of $1 billion associated with the sale of our investment in Coop, as well as higher U.S. and international marketing fuel margins. Additionally, the increase in 2025 was impacted by an accrual of $605 million recorded in 2024 related to litigation with Propel Fuels, compared with $262 million recorded in 2025 related to the same matter.
See the “Executive Overview and Business Environment” section for information on marketing fuel margins and other market factors impacting 2025 results. See Note 9—Investments, Loans and Long-Term Receivables and Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding the dispositions in 2025 and litigation with Propel Fuels, respectively.
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2024 vs. 2023
Before-tax income from the M&S segment decreased $886 million in 2024, compared with 2023. The decrease in 2024 was primarily driven by an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels, as well as lower U.S. marketing fuel margins.
See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.
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Renewable Fuels
| Year Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Millions of Dollars | |||||||||||||||||
| Income (Loss) Before Income Taxes | $ | (380) | (198) | 153 | |||||||||||||
| Thousands of Barrels Daily | |||||||||||||||||
| Operating Statistics | |||||||||||||||||
| Total Renewable Fuels Produced | 38 | 31 | 10 | ||||||||||||||
| Total Renewable Fuel Sales | 66 | 52 | 28 | ||||||||||||||
| Market Indicators | |||||||||||||||||
| Chicago Board of Trade (CBOT) soybean oil (dollars per pound) | $ | 0.49 | 0.44 | 0.58 | |||||||||||||
| California Low-Carbon Fuel Standard (LCFS) carbon credit (dollars per metric ton) | 56.38 | 60.48 | 72.76 | ||||||||||||||
| California Air Resource Board (CARB) ultra-low-sulfur diesel (ULSD) - San Francisco (dollars per gallon) | 2.47 | 2.48 | 2.87 | ||||||||||||||
| Biodiesel Renewable Identification Number (RIN) (dollars per RIN) | 1.01 | 0.59 | 1.35 | ||||||||||||||
The Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.
2025 vs. 2024
Results from the Renewable Fuels segment decreased $182 million in 2025, compared with 2024. The decline was primarily driven by increased feedstock costs from full-year facility operations, along with unfavorable inventory impacts. These decreases were partially offset by increased renewable product sales, as well as, higher credit generation.
2024 vs. 2023
Results from the Renewable Fuels segment decreased $351 million in 2024, compared with 2023. The decrease was primarily driven by higher costs related to the ramp-up of the Rodeo Complex.
See the “Executive Overview and Business Environment” section for information on market factors impacting this year’s results.
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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. Corporate overhead and other includes general and administrative expenses, technology costs, environmental costs associated with sites no longer in operation, restructuring costs related to our business transformation, foreign currency transaction gains and losses and other costs not directly associated with an operating segment. Corporate and Other also includes the change in the fair value of our investment in NOVONIX. See Note 20—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information regarding our investment in NOVONIX.
2025 vs. 2024
Net interest expense increased $153 million in 2025, compared with 2024, primarily driven by higher average debt balances.
Corporate overhead and other increased $90 million in 2025, compared with 2024, primarily due to higher depreciation expense associated with information technology assets, as well as higher advisory fees recorded during the second quarter of 2025 related to proxy solicitation services.
The fair value of our investment in NOVONIX declined by $13 million during 2025, compared with a decline of $3 million during 2024.
2024 vs. 2023
Net interest expense increased $116 million in 2024, compared with 2023, primarily driven by decreased interest income as a result of lower cash balances.
Corporate overhead and other decreased $133 million in 2024, compared with 2023, primarily due to a decrease in consulting fees associated with our business transformation, as well as lower employee-related expenses.
The fair value of our investment in NOVONIX declined by $3 million during 2024, compared with a decline of $39 million during 2023.
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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. | |||||||||||||||||
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. We funded capital expenditures and investments of $2.2 billion and completed acquisitions of $3.5 billion, net of cash acquired. Additionally, we paid $1.2 billion to repurchase shares of our common stock, paid $1.9 billion of dividends to our common stockholders, and repaid $0.4 billion of debt, net of proceeds from debt issuances. During 2025, cash and cash equivalents decreased $0.6 billion to $1.1 billion. At this time, we believe that our cash on hand, as well as the sources of liquidity described herein, will be sufficient to fund our obligations over the short- and long-term.
Significant Sources of Capital
Operating Activities
During 2025, cash generated by operating activities was $5.0 billion, a $0.8 billion increase compared with 2024. The increase was primarily due to higher earnings, driven by improved realized refining margins, partially offset by unfavorable working capital impacts.
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.
Our short- and long-term operating cash flows are highly dependent upon refining and marketing margins, NGL prices and chemicals margins. Prices and margins in our industry are typically volatile, and are driven by market conditions over which we have little or no control. Absent other mitigating factors, as these prices and margins fluctuate, we would expect a corresponding change in our operating cash flows.
The level and quality of output from our refineries also impacts our cash flows. Factors such as operating efficiency, maintenance turnarounds, market conditions, feedstock availability, and weather conditions can affect output. We actively manage the operations of our refineries, and any variability in their operations typically has not been as significant to cash flows as that caused by fluctuations in margins and prices. Our worldwide refining crude oil capacity utilization was 94%, 95% and 92% in 2025, 2024 and 2023, respectively. Our worldwide refining clean product yield was 87%, 87% and 85% in 2025, 2024 and 2023, respectively.
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Equity Affiliate Operating Distributions
Our operating cash flows are also impacted by distribution decisions made by our equity affiliates. Over the three years ended December 31, 2025, operating cash flows included aggregate distributions from our equity affiliates of $3.4 billion. We cannot control the amount of future dividends from equity affiliates; therefore, future dividend payments by these equity affiliates are not assured.
Debt Issuances
On September 18, 2025, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $2 billion aggregate principal amount of junior subordinated notes that are fully and unconditionally guaranteed by Phillips 66. The junior subordinated notes issuance consisted of:
•$1 billion aggregate principal amount of 5.875% Series A Junior Subordinated Notes due 2056 (Series A 2056 Notes).
•$1 billion aggregate principal amount of 6.200% Series B Junior Subordinated Notes due 2056 (Series B 2056 Notes).
Interest on the Series A 2056 Notes and Series B 2056 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2026. The Series A 2056 Notes will bear interest at 5.875% per year until March 15, 2031. The interest rate will reset every five years beginning on March 15, 2031, to equal the then-current five-year U.S. Treasury rate plus a spread of 2.283%, provided that the interest rate will not reset below 5.875%. The Series B 2056 Notes will bear interest at 6.200% per year until March 15, 2036. The interest rate will reset every five years beginning on March 15, 2036, to equal the then-current five-year U.S. Treasury rate plus a spread of 2.166%, provided that the interest rate will not reset below 6.200%. We may defer interest payments on the Series A 2056 Notes and Series B 2056 Notes on one or more occasions for up to 10 consecutive years per deferral period. If interest payments on the Series A 2056 Notes or Series B 2056 Notes are deferred, we may not, subject to certain limited exceptions, declare or pay any dividends or distributions, or redeem, purchase, acquire, or make a liquidation payment on any of our capital stock during the deferral period. Also, during the deferral period, we may not (i) pay any principal of, or interest or premium, if any, on or repay, repurchase or redeem any debt securities of Phillips 66 or Phillips 66 Company that rank equally with, or junior to, the Series A 2056 Notes and Series B 2056 Notes, respectively, in right of payment or (ii) make any payments with respect to any guarantee by Phillips 66 or Phillips 66 Company of indebtedness if the guarantee ranks equally with or junior to the Series A 2056 Notes or Series B 2056 Notes, respectively, in right of payment.
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. The senior unsecured notes issuance consisted of:
•$600 million aggregate principal amount of 5.250% Senior Notes due 2031 (Additional 2031 Notes).
•$600 million aggregate principal amount of 4.950% Senior Notes due 2035 (2035 Notes).
•$600 million aggregate principal amount of 5.500% Senior Notes due 2055 (2055 Notes).
Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on December 15, 2024. Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15 of each year and commenced on March 15, 2025.
On February 28, 2024, Phillips 66 Company issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:
•$600 million aggregate principal amount of 5.250% Senior Notes due 2031 (2031 Notes).
•$400 million aggregate principal amount of 5.300% Senior Notes due 2033 (Additional 2033 Notes).
•$500 million aggregate principal amount of 5.650% Senior Notes due 2054 (2054 Notes).
Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024. Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on June 30, 2024.
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On March 29, 2023, Phillips 66 Company issued $1.25 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:
•$750 million aggregate principal amount of 4.950% Senior Notes due December 2027.
•$500 million aggregate principal amount of 5.300% Senior Notes due June 2033.
Term Loan Agreement
On March 27, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, entered into a $1.5 billion delayed draw term loan agreement guaranteed by Phillips 66 (the Term Loan Agreement). The Term Loan Agreement provides for a single borrowing during a 90-day period commencing on the closing date, which borrowing was contingent upon the completion of the DCP LP Merger. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement bear interest at either: (a) the adjusted term Secured Overnight Financing Rate (SOFR) in effect from time to time plus the applicable margin; or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement. At December 31, 2025, no borrowings were outstanding under the Term Loan Agreement, as the remaining balance was prepaid in full on December 4, 2025. At December 31, 2024, $550 million was outstanding under the Term Loan Agreement, which had a maturity date of June 2026. This agreement was terminated as of December 31, 2025.
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. The distribution was recognized as a non-cash investing and financing transaction.
Accounts Receivable Securitization
On September 30, 2024, Phillips 66 Company entered into a 364-day, $500 million accounts receivable securitization facility (the Receivables Securitization Facility). Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its 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. On April 1, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $500 million to $1 billion. On September 29, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $1 billion to $1.25 billion and extend the term of the facility through September 28, 2026. 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. 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.
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. P66 Receivables is a separate legal entity with its own separate creditors, who will be entitled, upon its liquidation, to be satisfied out of P66 Receivables’ assets prior to assets or value in P66 Receivables becoming available to P66 Receivables’ equity holders. The assets of P66 Receivables, including any funds of P66 Receivables that may be commingled with funds of any of its affiliates for purposes of cash management and related efficiencies, are not available to pay creditors of Phillips 66 Company, Phillips 66 or any affiliate thereof. Collections on 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
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case, subject to the terms set forth in the Receivables Securitization Facility. The amount available for borrowing or sale of accounts receivable may be limited by the availability of eligible accounts receivable and other customary factors and conditions, as well as the covenants set forth in the Receivables Securitization Facility.
Sales of accounts receivable under the Receivables Securitization Facility meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet. P66 Receivables guarantees payment, in full, for accounts receivable sold to the purchasers. Cash receipts from the sale of accounts receivable under the Receivables Securitization Facility, received at the time of sale, are classified as cash flows from operating activities. For the year-ended December 31, 2025, we sold $759 million in accounts receivable in exchange for cash proceeds of $290 million, and a $469 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. 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. 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. Borrowings are secured by the accounts receivable, held by P66 Receivables, which remain reported as accounts receivable on the consolidated balance sheet. At December 31, 2025 and 2024, we had outstanding borrowings of $200 million and $375 million, respectively. These borrowings were secured by accounts receivable held by P66 Receivables of $4.4 billion and $4.6 billion for 2025 and 2024, respectively, which are included within the “Accounts and notes receivable” line item on our consolidated balance sheet.
At December 31, 2025, we had utilized $367 million of the $1.25 billion capacity of the Receivables Securitization Facility from $167 million of sold accounts receivable not yet remitted to the Administrative Agent and $200 million of outstanding borrowings. At December 31, 2024, we had utilized the full $500 million capacity of our Receivables Securitization Facility from $125 million of sold accounts receivable not yet remitted to the Administrative Agent and $375 million of outstanding borrowings.
Accounts Receivable Factoring
In addition to the Receivables Securitization Facility, discussed above, the Company entered into other facilities with various financial institutions during the fourth quarter of 2025 that enable the Company to sell certain eligible accounts receivable to these financial institutions on a non-recourse basis. Sales of accounts receivable under these facilities meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet. Cash receipts from the sale of accounts receivable, received at the time of sale, are classified as cash flows from operating activities. The Company retains the servicing on all accounts receivable sold under these facilities. For the year ended December 31, 2025, we sold $195 million of accounts receivable under these facilities for cash proceeds. We recognized immaterial charges associated with these transfers, which are included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income for the year ended December 31, 2025.
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Credit Facilities and Commercial Paper
Phillips 66 and Phillips 66 Company
On January 13, 2025, we entered into a $200 million uncommitted credit facility (the 2025 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2025 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2025 Uncommitted Facility has no commitment fees or compensating balance requirements. Outstanding borrowings under the 2025 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR plus the applicable margin, (b) the adjusted daily simple SOFR plus the applicable margin or (c) the base rate, in each case plus the applicable margin. Each borrowing matures six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At December 31, 2025, no borrowings were outstanding under the 2025 Uncommitted Facility.
On June 25, 2024, we entered into a $400 million uncommitted credit facility (the 2024 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2024 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2024 Uncommitted Facility has no commitment fees or compensating balance requirements. Outstanding borrowings under the 2024 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR, (b) the adjusted daily simple SOFR or (c) the reference rate, in each case plus the applicable margin. Each borrowing matures six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At December 31, 2025, no borrowings were outstanding, while at December 31, 2024, the entire $400 million had been drawn under the 2024 Uncommitted Facility.
On February 28, 2024, we entered into a new $5 billion revolving credit agreement (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of February 28, 2029. The Facility replaced our previous $5 billion revolving credit facility dated as of June 23, 2022, with Phillips 66 Company as the borrower and Phillips 66 as the guarantor, and the previous revolving credit facility was terminated. The Facility contains customary covenants similar to the previous revolving credit facility, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Facility has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Facility, in whole or in part, without premium or penalty. We have the option to increase the overall capacity to $6 billion, subject to certain conditions. We also have the option to extend the scheduled maturity of the Facility for up to two additional one-year terms, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment. Outstanding borrowings under the Facility bear interest at either: (a) the adjusted term SOFR (as described in the Facility) in effect from time to time plus the applicable margin; or (b) the reference rate (as described in the Facility) plus the applicable margin. The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time. At December 31, 2025 and 2024, no amounts were drawn under the Facility or the previous revolving credit facility.
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.
DCP Midstream Class A Segment
On March 15, 2024, DCP LP terminated its $1.4 billion credit facility and its accounts receivable securitization facility that previously provided for up to $350 million of borrowing capacity. In conjunction with the termination of these facilities, DCP LP repaid $25 million in borrowings outstanding under its $1.4 billion credit facility and $350 million of borrowings outstanding under its accounts receivable securitization facility during the three months ended March 31, 2024.
Total Committed Capacity Available
At December 31, 2025, and 2024, we had $5.7 billion and $4.6 billion, respectively, of total committed capacity available under the credit facilities described above.
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Asset & Investment Dispositions
On December 1, 2025, we divested 65% of our interest in Germany and Austria Marketing for cash proceeds of $1.7 billion.
On January 31, 2025, we sold our 49% ownership interest in Coop and received cash proceeds of $1.2 billion, consisting of a sales price of $1.15 billion and a final dividend relating to financial year 2024 of $92 million from Coop that was paid on January 30, 2025.
On January 30, 2025, DCP LP sold its 25% ownership interest in GCX for cash proceeds of $853 million.
On December 10, 2024, we sold our equity interests in certain pipeline and terminaling assets in North Dakota for cash proceeds of approximately $143 million.
On August 30, 2024, we sold certain Midstream gathering and processing assets in Texas for cash proceeds of $41 million.
On August 1, 2024, we sold our ownership interests in certain gathering and processing assets in Louisiana and Alabama for cash proceeds of $173 million.
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.
See Note 9—Investments, Loans and Long-Term Receivables and Note 10—Properties, Plants and Equipment, in the Notes to Consolidated Financial Statements for additional information regarding asset and investment dispositions.
Phillips 66 Availability of Debt Financing
In September 2025, Moody’s Ratings announced a long-term credit rating change for the company to Baa1 from A3 and affirmed the P-2 rating assigned to the company’s commercial paper program. Moody’s Ratings’ current outlook is stable. Standard & Poor’s currently rates the company’s long-term debt at BBB+ with a stable outlook and commercial paper at A-2. Both agencies’ ratings are considered investment grade. Failure to maintain investment grade ratings could prohibit us from accessing the commercial paper market. However, a rating downgrade by one or both rating agencies would not trigger an automatic default under any of our corporate debt and we would expect to maintain access to funds under our existing liquidity facilities.
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. 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.
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Off-Balance Sheet Arrangements
Lease Residual Value Guarantees
Under the operating lease agreement for our headquarters facility in Houston, Texas, we 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. In September 2025, we amended and extended the lease term to September 2030. Under the new operating lease agreement, we have a residual value guarantee with a maximum potential future exposure of $404 million at December 31, 2025.
We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $175 million. These leases have remaining terms of one to ten years.
Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)
In 2020, the trial court presiding over litigation brought by the Standing Rock Sioux Tribe (the Tribe) ordered the U.S. Army Corps of Engineers (USACE) to prepare an Environmental Impact Statement (EIS) addressing environmental impacts from an easement allowing the passage of the Dakota Access Pipeline (DAPL) under Lake Oahe in North Dakota. Later in 2020, the trial court vacated the easement, but operations have been allowed to continue while the USACE proceeds with the EIS as ordered. The Tribe’s requests for a shutdown have been denied. Most recently, in March 2025, the trial court dismissed a second lawsuit filed by the Tribe, again challenging USACE’s allowance of pipeline operations while the EIS process proceeds. The Tribe’s lawsuit was premature, and the trial court held that it cannot be refiled until after a final EIS is issued.
In December 2025, the USACE published its final EIS, completing its analysis of alternatives. The final EIS evaluates five alternatives: two no-action alternatives (denial with restoration or abandonment) and three action alternatives, with one marked as USACE’s preferred alternative, that would grant the easement under varying conditions. The preferred alternative would grant the easement subject to the same conditions as the 2017 easement but would authorize an increased throughput volume of 1.1 million barrels per day (bpd), up from the previous 570,000 bpd under the original authorization. The remaining action alternatives would impose either additional operational conditions or require an alternate pipeline route, both of which may entail substantial implementation costs and could have a material impact on our financial statements.
We await a Record of Decision (ROD), which will provide a definitive statement of the selected alternative and any related conditions. The Standing Rock Sioux Tribe and affiliated parties may file a new lawsuit in Washington, D.C., challenging the ROD shortly after it is issued.
Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access. On April 1, 2024, Dakota Access’ wholly owned subsidiary repaid $1 billion aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25% share of the repayment, or $250 million, with a capital contribution of $171 million in March 2024 and $79 million of distributions we elected not to receive from Dakota Access in the first quarter of 2024. At December 31, 2025, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $850 million.
In addition, Phillips 66 Partners and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the notes offering. Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation. At December 31, 2025, our 25% share of the maximum potential equity contributions under the CECU was approximately $215 million. If the pipeline is required to cease operations, it may have a material adverse effect on our results of operations and cash flows. Should operations cease and Dakota Access and ETCO not have sufficient funds to pay its expenses, we also could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $10 million annually, in addition to the potential obligations under the CECU at December 31, 2025.
See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial statements for additional information regarding our investments in Dakota Access and ETCO. See Note 17—Guarantees, in the Notes to Consolidated Financial Statements for additional information regarding guarantees.
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Capital Requirements
Capital Expenditures and Investments
For information about our capital expenditures and investments, see the “Capital Spending” section below.
Debt Financing
Our debt balance at December 31, 2025, was $19.7 billion and our total debt-to-capital ratio was 39%. See Note 15—Debt, in the Notes to Consolidated Financial Statements for our annual debt maturities over the next five years and more information on debt repayments.
Repayments
On December 31, 2025, Phillips 66 early redeemed $400 million of its 1.300% Senior Notes due February 2026. After the redemption, an aggregate principal amount of $100 million remained outstanding.
On December 4, 2025, Phillips 66 Company repaid the remaining $550 million outstanding under the Term Loan Agreement, which had a maturity date of June 2026, and terminated this agreement.
On June 27, 2025, DCP LP early redeemed the outstanding $525 million of its 5.375% Senior Notes due July 2025, with an aggregate principal amount of $825 million.
On February 18, 2025, upon maturity, Phillips 66 Partners repaid its 3.605% Senior Notes due February 2025, with an aggregate principal amount of $59 million.
On December 16, 2024, upon maturity, Phillips 66 Company and Phillips 66 Partners repaid the 2.450% Senior Notes due December 2024 with an aggregate principal amount of $300 million.
On March 29, 2024, DCP LP early redeemed $300 million of its 5.375% Senior Notes due July 2025, at par with an aggregate principal amount of $825 million.
On March 4, 2024, Phillips 66 Company repaid $700 million of the $1.25 billion borrowed under its delayed draw term loan that matures in June 2026.
On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900% senior notes due February 2024 with an aggregate principal amount of $800 million.
DCP LP Cash Distributions to Unitholders
DCP LP’s partnership agreement requires it to distribute all available cash within 45 days after the end of each quarter. 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.
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. 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. On September 20, 2024, Phillips 66 and Phillips 66 Company ceased to be the primary obligors under the Discharged Notes. The transfer of the government obligations to the trustee was accounted for as a transfer of financial assets. The Discharged Notes and the government obligations were derecognized from our balance sheet at December 31, 2024. For the year ended December 31, 2024, we recognized an immaterial gain on the extinguishment of this debt.
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Acquisitions
On October 1, 2025, we acquired the remaining 50% ownership interest in WRB from Cenovus for total cash consideration of $1.3 billion, subject to post-closing adjustments. This acquisition, which will enable full integration with our broader value chain and expand our position in the Central Corridor region, was funded with cash and borrowings under our short-term liquidity facilities. Associated with the acquisition, we assumed $450 million of short-term debt at acquisition and was also fully repaid on October 1, 2025. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
During the second quarter of 2025, we completed the Coastal Bend acquisition, which own various long haul NGL pipelines, fractionation facilities and distribution systems, for total consideration of $2.2 billion, net of cash acquired. This acquisition further enhances our wellhead-to-market strategy and was funded with cash and borrowings under our short-term liquidity facilities. See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.
On October 1, 2024, we acquired a marketing business on the U.S. West Coast in our M&S segment for total consideration of $68 million. These operations were acquired to support the placement of renewable diesel produced by the Rodeo Complex.
On July 1, 2024, we acquired Dos Picos in our Midstream segment to expand our natural gas gathering and processing operations in the Permian Basin for cash consideration of $565 million.
Pending Acquisition
On January 5, 2026, we entered into a definitive agreement to acquire the assets and associated infrastructure of the Lindsey Oil Refinery. The closing date of this transaction is dependent on regulatory approval and completion of other customary closing conditions.
Dividends
On February 11, 2026, our Board of Directors declared a quarterly cash dividend of $1.27 per common share. The dividend is payable March 4, 2026, to shareholders of record at the close of business on February 25, 2026.
Share Repurchases
Since July 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock, and we have repurchased 248 million shares at an aggregate cost of $22.7 billion. In 2025, we repurchased 9.7 million shares at an aggregate cost of $1.2 billion. Our share repurchase authorizations do not expire. Any future share repurchases will be made at the discretion of management and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans. Shares of stock repurchased are held as treasury shares.
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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. 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 commodities are used to supply our refineries and fractionators and optimize our supply chain. At December 31, 2025, commodity purchase commitments with third parties and related parties were $43.0 billion and $19.8 billion, respectively. The remaining purchase obligations mainly represent agreements to access and utilize the capacity of third-party equipment and facilities, including pipelines and product terminals, to transport, process, treat, and store products.
Debt Principal and Interest Obligations
As of December 31, 2025, our aggregate principal amount of outstanding debt was $19.9 billion, with $1.0 billion due within one year. Our obligations for interest on the debt totaled $14.4 billion, with $947 million due within one year. 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 22—Leases, in the Notes to Consolidated Financial Statements for information regarding our lease obligations and timing of our expected lease payments.
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.
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Capital Spending
Our capital expenditures and investments, excluding acquisitions, represent consolidated capital spending.
| Millions of Dollars | |||||||||||||||||||||||
| 2026 Budget | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Capital Expenditures and Investments | |||||||||||||||||||||||
| Midstream | $ | 1,100 | 1,231 | 751 | 625 | ||||||||||||||||||
| Chemicals | — | — | — | — | |||||||||||||||||||
| Refining* | 1,080 | 776 | 582 | 586 | |||||||||||||||||||
| Marketing and Specialties | 80 | 118 | 85 | 101 | |||||||||||||||||||
| Renewable Fuels | 40 | 56 | 375 | 753 | |||||||||||||||||||
| Corporate and Other | 70 | 52 | 66 | 90 | |||||||||||||||||||
| Total Capital Expenditures and Investments | $ | 2,370 | 2,233 | 1,859 | 2,155 | ||||||||||||||||||
| Selected Equity Affiliates** | |||||||||||||||||||||||
| CPChem | $ | 680 | 796 | 809 | 1,009 | ||||||||||||||||||
| WRB* | — | 99 | 121 | 189 | |||||||||||||||||||
| Total Selected Equity Affiliates | $ | 680 | 895 | 930 | 1,198 | ||||||||||||||||||
* On October 1, 2025, we acquired the remaining 50% equity interest in WRB from Cenovus. As such, 100% of WRB’s capital expenditures and investments for the fourth quarter of 2025 and for the 2026 budget are included in Refining capital expenditures and investments.
** Our share of joint ventures’ capital spending.
Midstream
Capital spending in our Midstream segment was $2.6 billion for the three-year period ended December 31, 2025, primarily for:
•Completion of a second Dos Picos gas plant and increased capacity on the Coastal Bend pipeline, further expanding our NGL operations.
•Gathering and processing projects to further align our wellhead-to-market strategy.
•Spending associated with other reliability and maintenance projects in our Transportation and NGL businesses.
Chemicals
During the three-year period ended December 31, 2025, CPChem had a self-funded capital program that totaled $5.2 billion on a 100% basis. Capital spending was primarily for the development of petrochemical projects on the U.S. Gulf Coast and in the Middle East, as well as sustaining, debottlenecking and optimization projects on existing assets.
Refining
Capital spending for the Refining segment during the three-year period ended December 31, 2025, was $1.9 billion, primarily for projects to improve reliability at our refineries and installation of facilities to improve market capture, product value and utilization, such as our recently completed Sweeny Crude Flex project.
Marketing and Specialties
Capital spending for the M&S segment during the three-year period ended December 31, 2025, was $304 million, primarily for the continued development and enhancement of retail sites in Europe, marketing-related information technology enhancements, investment in electric vehicle charging infrastructure in the United States, spend associated with marketing and commercial fleet fueling businesses on the U.S. West Coast and reliability and maintenance projects for our Specialties business.
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Renewable Fuels
Capital spending for the Renewable Fuels segment during the three-year period ended December 31, 2025, was $1.2 billion, primarily related to the construction of facilities to produce renewable fuels at the Rodeo Complex.
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. Our projected $2.4 billion capital budget excludes our portion of planned capital spending by CPChem totaling $680 million.
Midstream capital budget of $1.1 billion comprises $400 million for sustaining projects and $700 million for growth projects. 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. 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. 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.
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Contingencies
A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain.
Other than with respect to the legal matters described herein, based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.
Legal and Tax Matters
Our legal and tax matters are handled by our legal and tax organizations, respectively. These organizations apply their knowledge, experience and professional judgment to the specific characteristics of our cases and uncertain tax positions. We employ a litigation management process to manage and monitor legal proceedings. Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required. In the case of income tax-related contingencies, we monitor tax legislation and court decisions, the status of tax audits and the statute of limitations within which a taxing authority can assert a liability.
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Propel Fuels Litigation
In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc. (Propel Fuels), a California company that distributes E85 and other alternative fuels through fueling kiosks. Ultimately, the parties were not able to reach an agreement, and negotiations were terminated in August 2018. On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. 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. 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. 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. 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. 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. 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. As a result of the August 2025 final judgment and the October 2024 jury verdict, we recorded $262 million and $604.9 million of expense for the years ended December 31, 2025 and 2024, respectively, which are included within the “Selling, general and administrative expenses” line on our consolidated statement of income and reported in the M&S segment. Therefore, our recorded accruals totaling $867 million and $604.9 million as of December 31, 2025 and 2024, respectively, are reflected as “Other liabilities and deferred credits” on our consolidated balance sheet. However, it is reasonably possible that the estimate of the loss could change based on the progression of the case, including the appeals process. If information were to become available that would allow us to reasonably estimate a range of potential exposure in an amount higher or lower than the amount already accrued, we would adjust our accrued liabilities accordingly. While Phillips 66 Company believes the jury verdict is not legally or factually supported, 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.
Environmental
We are subject to numerous international, federal, state and local environmental laws and regulations. Among the most significant of these international and federal environmental laws and regulations are the:
•U.S. Federal Clean Air Act, which governs air emissions.
•U.S. Federal Clean Water Act, which governs discharges into bodies of water.
•European Union Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (EU REACH), which governs production, marketing and use of chemicals and the United Kingdom’s legislation for the Registration, Evaluation, Authorization and Restriction of Chemicals, which replaced EU REACH in the United Kingdom in 2021 following the United Kingdom’s exit from the European Union (BREXIT).
•U.S. Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which imposes liability on generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur.
•U.S. Federal Resource Conservation and Recovery Act (RCRA), which governs the treatment, storage and disposal of solid waste.
•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.
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•U.S. 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).
These laws and their implementing regulations set limits on emissions and, in the case of discharges to water, establish water quality limits. They also, in most cases, require permits in association with new or modified operations. These permits can require an applicant to collect substantial information in connection with the application process, which can be expensive and time consuming. 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. While similar, in some cases these regulations may impose additional, or more stringent, requirements that can add to the cost and difficulty of developing infrastructure and marketing and transporting products across state and international borders. For example, in California the South Coast Air Quality Management District (SCAQMD) approved amendments to the Regional Clean Air Incentives Market (RECLAIM) that became effective in 2016, which required a phased reduction of nitrogen oxide emissions through 2022, affecting refineries in the Los Angeles metropolitan area. In 2017, SCAQMD required additional nitrogen oxide emissions reductions through 2025 and, on November 5, 2021, promulgated new regulations to replace the RECLAIM program with a traditional command and control regulatory regime.
The ultimate financial impact arising from environmental laws and regulations is neither clearly known nor easily determinable as new standards, such as air emissions standards, water quality standards and stricter fuel regulations, continue to evolve. However, environmental laws and regulations, including those that may arise to address concerns about global climate change, are expected to continue to have an increasing impact on our operations in the United States and in other countries in which we operate. Notable areas of potential impacts include air emissions compliance and remediation obligations in the United States.
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. Environmental Protection Agency (EPA) to record compliance with the Renewable Fuel Standard (RFS). If an obligated party has more RINs than it needs to meet its obligation, it may sell or trade the extra RINs, or instead choose to “bank” them for use the following year. We have met the EPA’s renewable volume obligations (RVO) to date. These obligations have been met using a variety of operating and capital strategies. We are also implementing advanced and different technologies to address projected future RVOs. On June 21, 2023, the EPA finalized RVO for the 2023, 2024 and 2025 compliance years. These standards increase cellulosic volumes, which reflect the EPA’s forecast for increasing compressed natural gas and NGL volumes derived from biogas. In addition, the EPA increased total advanced biofuel volumes from the 5.63 billion gallons established for the 2022 compliance year to 7.33 billion gallons in 2025. We may experience a decrease in demand for refined petroleum products and increased program costs if not fully recovered in the market. This program continues to be the subject of possible Congressional review and re-promulgation in revised form, and the EPA’s final regulations establishing RVO requirements have been and continue to be subject to legal challenge, further creating uncertainty regarding RVO requirements.
We can fulfill our obligation under RFS through blending renewable fuels into the motor fuels we produce, producing renewable fuels at the Rodeo Complex, or through purchasing RINs on the open market. For the years ended December 31, 2025 and 2024, we primarily fulfilled our obligation under RFS through blending renewable fuels into the motor fuels we produced or by renewable fuels produced at the Rodeo Complex and incurred no expenses to purchase RINs in the open market to comply with the RFS for our wholly owned refineries. 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. Prior to the acquisition of WRB on October 1, 2025, our jointly owned refineries
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also incurred expenses associated with the purchase of RINs in the open market, of which our share was $280 million, $255 million and $389 million for the years ended December 31, 2025, 2024 and 2023, respectively. These expenses were included in the “Equity in earnings of affiliates” line item on our consolidated statement of income through September 30, 2025. The amount of these expenses and fluctuations between periods is primarily driven by the market price of RINs, refinery and renewable fuels production, blending activities and RVO requirements.
We also are subject to certain laws and regulations relating to environmental remediation obligations associated with current and past operations, including CERCLA and RCRA and their state equivalents. Remediation obligations include cleanup responsibility arising from petroleum releases from underground storage tanks located at numerous previously and currently owned and/or operated petroleum-marketing outlets throughout the United States. Federal and state laws require contamination caused by such underground storage tank releases be assessed and remediated to meet applicable standards. In addition to other cleanup standards, many states have adopted cleanup criteria for methyl tertiary-butyl ether for soil and groundwater and both the EPA and many states may adopt cleanup standards for per- and poly-fluoroalkyl substances, which may have been a constituent in certain firefighting foams used or stored at or near some of our facilities.
At RCRA-permitted facilities, we are required to assess environmental conditions. If conditions warrant, we may be required to remediate contamination caused by prior operations. In contrast to CERCLA, which is often referred to as “Superfund,” the cost of corrective action activities under RCRA corrective action programs is typically borne solely by us. We anticipate increased expenditures for RCRA remediation activities may be required, but such annual expenditures for the near term are not expected to vary significantly from the range of such expenditures we have experienced over the past few years. Longer-term expenditures are subject to considerable uncertainty and may fluctuate significantly.
We occasionally receive requests for information or notices of potential liability from the EPA and state environmental agencies alleging that we are a potentially responsible party under CERCLA or an equivalent state statute. On occasion, we also have been made a party to cost recovery litigation by those agencies or by private parties. These requests, notices and lawsuits assert potential liability for remediation costs at various sites that typically are not owned by us, but allegedly contain wastes attributable to our past operations. At 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. During 2025, our legal organization approved the removal of two sites, leaving 17 unresolved sites with potential liability at December 31, 2025.
For the majority of Superfund sites, our potential liability will be less than the total site remediation costs because the percentage of waste attributable to us, versus that attributable to all other potentially responsible parties, is relatively low. Although liability of those potentially responsible is generally joint and several for federal sites and frequently so for state sites, other potentially responsible parties at sites where we are a party typically have had the financial strength to meet their obligations, and where they have not, or where potentially responsible parties could not be located, our share of liability has not increased materially. Many of the sites for which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or attain a settlement of liability. Actual cleanup costs generally occur after the parties obtain the EPA or equivalent state agency approval of a remediation plan. There are relatively few sites where we are a major participant, and given the timing and amounts of anticipated expenditures, neither the cost of remediation at those sites nor such costs at all CERCLA sites, in the aggregate, is expected to have a material adverse effect on our competitive or financial condition.
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. 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.
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).
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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. We also have accrued for a number of sites we identified that may require environmental remediation, but which are not currently the subject of CERCLA, RCRA or state enforcement activities. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the future, we may incur significant costs under both CERCLA and RCRA. Remediation activities vary substantially in duration and cost from site to site, depending on the mix of unique site characteristics, evolving remediation technologies, diverse regulatory agencies and enforcement policies, and the presence or absence of potentially liable third parties. Therefore, it is difficult to develop reasonable estimates of future site remediation costs.
Notwithstanding any of the foregoing, and as with other companies engaged in similar businesses, environmental costs and liabilities are inherent concerns in certain of our operations and products, and there can be no assurance that those costs and liabilities will not be material. However, we currently do not expect any material adverse effect on our results of operations or financial position as a result of compliance with current environmental laws and regulations.
Climate Change
There has been a broad range of proposed or promulgated state, national and international laws focusing on GHG emissions reduction, including various regulations proposed or issued by the EPA. These proposed or promulgated laws apply or could apply in states and/or countries where we have interests or may have interests in the future. Laws regulating GHG emissions continue to evolve, and while it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation, such laws potentially could have a material impact on our results of operations and financial condition as a result of increasing costs of compliance, lengthening project implementation and agency reviews, or reducing demand for certain hydrocarbon products. Examples of legislation or precursors for possible regulation that do or could affect our operations include:
•Entities in the United Kingdom are subject to the UK ETS, which is similar to the EU ETS, to combat climate change and is a key tool for reducing industrial GHG emissions. 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. Other GHG emissions programs in states in the western U.S. have been enacted or are under consideration or development, including amendments to California's Low Carbon Fuel Standard, California’s Advanced Clean Cars and Trucks Programs, California’s Carbon Neutrality by 2045 Scoping Plan, Oregon's Low Carbon Fuel Standard and Climate Protection Plan, and Washington's carbon reduction programs.
•United States’ Inflation Reduction Act, which contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies, which is intended to accelerate the energy transition.
•The Supreme Court decision in Massachusetts v. EPA, 549 U.S. 497, 127 S. Ct. 1438 (2007), confirming that the EPA has the authority to regulate carbon dioxide as an “air pollutant” under the Federal Clean Air Act.
•The EPA’s announcement on March 29, 2010 (published as “Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting Programs,” 75 Fed. Reg. 17004 (April 2, 2010)), and the EPA’s and U.S. Department of Transportation’s joint promulgation of a Final Rule on April 1, 2010, that triggers regulation of GHGs under the Clean Air Act. 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.
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•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. The EPA commenced rulemaking in 2017 to rescind the Clean Power Plan and, in August 2018, the EPA proposed the Affordable Clean Energy (ACE) rule as its replacement. On January 19, 2021, the U.S. Court of Appeals for the District of Columbia invalidated the ACE rule and remanded the matter to the EPA, essentially restarting this rulemaking process.
•Carbon taxes in certain jurisdictions.
•GHG emission cap and trade programs in certain jurisdictions.
In the EU, the first phase of the EU ETS completed at the end of 2007. Phase II was undertaken from 2008 through 2012, and Phase III ran from 2013 through to 2020. Phase IV runs from January 1, 2021 through 2030 and sectors covered under the ETS must reduce their GHG emissions by 43% compared to 2005 levels and there is agreement between the EU Member States, the European Parliament, and the EU Commission (which is pending ratification by the EU Council and European Parliament) to increase the Phase IV GHG emissions reduction to 63% by 2030 compared to 2005 levels. The United Kingdom has its own GHG emission reduction targets under the UK ETS. Phillips 66 has assets that are subject to the EU ETS and assets that are subject to the UK ETS.
From November 30 to December 12, 2015, more than 190 countries, including the United States, participated in the United Nations Climate Change Conference in Paris, France. The conference culminated in what is known as the “Paris Agreement,” which, upon certain conditions being met, entered into force on November 4, 2016. The Paris Agreement establishes a commitment by signatory parties to pursue domestic GHG emission reductions. In January 2025, President Trump signed an executive order directing the United States to withdraw from the Paris Agreement, and the withdraw became effective in January 2026, following the applicable notification period. Additionally, in January 2026, the United States withdrew from several international climate organizations, representing a further departure from the previous administration’s positions and GHG commitments. 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.
In the United States, some additional form of regulation is likely to be forthcoming, particularly at the state level in the absence of federal action, with respect to GHG emissions. Such regulation could take any of several forms that may result in additional financial burden in the form of taxes, the restriction of output, investments of capital to maintain compliance with laws and regulations, or required acquisition or trading of emission allowances.
Compliance with changes in laws and regulations that create a GHG emission trading program, GHG reduction requirements or carbon taxes could significantly increase our costs, reduce demand for fossil energy derived products, impact the cost and availability of capital and increase our exposure to litigation. Such laws and regulations could also increase demand for less carbon intensive energy sources.
An example of one such program is California’s cap and trade program, which was promulgated pursuant to the State’s Global Warming Solutions Act. The program had been limited to certain stationary sources, which include our refineries in California, but beginning in January 2015 was expanded to include emissions from transportation fuels distributed in California. Inclusion of transportation fuels in California’s cap and trade program as currently promulgated has increased our cap and trade program compliance costs. 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. While such novel laws and implementing regulations may be subject to legal challenges, additional states may follow suit. 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.
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•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.
We consider and take into account anticipated future GHG emissions in designing and developing major facilities and projects, and implement energy efficiency initiatives to reduce GHG emissions. Data on our GHG emissions, legal requirements regulating such emissions, and the possible physical effects of climate change on our coastal assets are incorporated into our planning, investment, and risk management decision-making. We are working to continuously improve operational and energy efficiency through resource and energy conservation efforts throughout our operations.
In February 2022, we announced a target to reduce our Scope 1 and Scope 2 GHG emissions intensity related to our operations by 50% of 2019 levels by the year 2050. The 2050 target builds upon our 2030 GHG emissions intensity targets to reduce Scope 1 and Scope 2 emissions from our operations by 30% and Scope 3 emissions from our energy products by 15% compared to 2019 levels.
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. Securities and Exchange Commission (SEC) reporting purposes. 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.
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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. See Note 1—Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements for descriptions of our major accounting policies. Some of these accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts would have been reported under different conditions, or if different assumptions had been used. The following discussion of critical accounting estimates addresses accounting areas where the nature of accounting estimates or assumptions could be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change.
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. The excess or shortfall of the purchase price when compared to the fair value of the net tangible and identifiable intangible assets acquired, if any, is recorded as goodwill or a bargain purchase gain, respectively. Judgment is made in estimating the individual fair value of property, plant and equipment, intangible assets, noncontrolling interests and other assets and liabilities. We use available information to make these fair value determinations and engage third-party specialists in the valuation process as necessary.
The fair values of assets acquired, liabilities assumed and noncontrolling interests as of the acquisition date are often estimated using a combination of approaches, including the income approach, which requires us to project future cash flows and apply an appropriate discount rate; the cost approach, which requires estimates of replacement costs and depreciation and obsolescence estimates; and the market approach which uses market data and adjusts for entity specific differences. 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.
Impairment of Long-Lived Assets and Equity Method Investments
Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in future expected cash flows. If the sum of the undiscounted expected future before-tax cash flows of an asset group is less than the carrying value, including applicable liabilities, the carrying value is written down to estimated fair value. Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined using one or more of the following methods: the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants; a market multiple for similar assets; historical market transactions including similar assets, adjusted using principal market participant assumptions when necessary; or replacement cost adjusted for physical deterioration and economic obsolescence. 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.
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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. When it is determined that an indicated impairment is other than temporary, a charge is recognized for the difference between the investment’s carrying value and its estimated fair value. When determining whether a decline in value is other than temporary, management considers factors such as the duration and extent of the decline, the investee’s financial condition and near-term prospects, and our ability and intention to retain our investment for a period that allows for recovery. When quoted market prices are not available, the fair value is usually based on the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and observed market earnings multiples of comparable companies, if appropriate. Different assumptions could affect the timing and the amount of an impairment of an investment in any period.
See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information.
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GUARANTOR FINANCIAL INFORMATION
We have various cross guarantees between Phillips 66 and its wholly owned subsidiary Phillips 66 Company (together, the Obligor Group) with respect to publicly held debt securities. Phillips 66 conducts substantially all of its operations through subsidiaries, including Phillips 66 Company, and those subsidiaries generate substantially all of its operating income and cash flow. Phillips 66 has fully and unconditionally guaranteed the payment obligations of Phillips 66 Company with respect to its publicly held debt securities. In addition, Phillips 66 Company has fully and unconditionally guaranteed the payment obligations of Phillips 66 with respect to its publicly held debt securities. All guarantees are full and unconditional. At December 31, 2025, $16.0 billion of publicly held debt securities has been guaranteed by the Obligor Group.
Summarized financial information of the Obligor Group is presented on a combined basis. Intercompany transactions among the members of the Obligor Group have been eliminated. The financial information of non-guarantor subsidiaries has been excluded from the summarized financial information. Significant intercompany transactions and receivable/payable balances between the Obligor Group and non-guarantor subsidiaries are presented separately in the summarized financial information.
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The summarized results of operations for the year ended December 31, 2025, and the summarized financial position at December 31, 2025, of the Obligor Group on a combined basis were:
| Summarized Combined Statement of Income | Millions of Dollars | ||||
| Sales and other operating revenues | $ | 97,379 | |||
| Revenues and other income—non-guarantor subsidiaries | 14,243 | ||||
| Purchased crude oil and products—third parties | 60,375 | ||||
| Purchased crude oil and products—related parties | 12,756 | ||||
| Purchased crude oil and products—non-guarantor subsidiaries | 30,088 | ||||
| Loss before income taxes | (2,315) | ||||
| Net loss | (2,268) | ||||
| Summarized Combined Balance Sheet | Millions of Dollars | ||||
| Accounts and notes receivable—third parties | $ | 1,348 | |||
| Accounts and notes receivable—related parties | 254 | ||||
| Due from non-guarantor subsidiaries, current | 3,825 | ||||
| Total current assets | 9,676 | ||||
| Investments and long-term receivables | 8,502 | ||||
| Net properties, plants and equipment | 10,964 | ||||
| Goodwill | 906 | ||||
| Due from non-guarantor subsidiaries, noncurrent | 548 | ||||
| Other assets associated with non-guarantor subsidiaries | 1,015 | ||||
| Total noncurrent assets | 24,575 | ||||
| Total assets | 34,251 | ||||
| Due to non-guarantor subsidiaries, current | $ | 5,892 | |||
| Total current liabilities | 13,788 | ||||
| Long-term debt | 15,465 | ||||
| Due to non-guarantor subsidiaries, noncurrent | 10,859 | ||||
| Total noncurrent liabilities | 33,243 | ||||
| Total liabilities | 47,031 | ||||
| Total equity | (12,780) | ||||
| Total liabilities and equity | 34,251 | ||||
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NON-GAAP RECONCILIATIONS
Refining
Our realized refining margins measure the difference between (a) sales and other operating revenues derived from the sale of petroleum products manufactured at our refineries and (b) costs of feedstocks, primarily crude oil, used to produce the petroleum products. The realized refining margins are adjusted to include our proportional share of our joint venture refineries’ realized margins, as well as to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized refining margins are converted to a per-barrel basis by dividing them by total refinery processed inputs (primarily crude oil) measured on a barrel basis, including our share of inputs processed by our joint venture refineries. Our realized refining margin per barrel is intended to be comparable with industry refining margins, which are known as “crack spreads.” As discussed in “Executive Overview and Business Environment—Business Environment,” industry crack spreads measure the difference between market prices for refined petroleum products and crude oil. We believe realized refining margin per barrel calculated on a similar basis as industry crack spreads provides a useful measure of how well we performed relative to benchmark industry refining margins.
The GAAP performance measure most directly comparable to realized refining margin per barrel is the Refining segment’s “income (loss) before income taxes per barrel.” Realized refining margin per barrel excludes items that are typically included in a manufacturer’s gross margin, such as depreciation and operating expenses, and other items used to determine income (loss) before income taxes, such as general and administrative expenses. It also includes our proportional share of joint venture refineries’ realized refining margins and excludes special items. Because realized refining margin per barrel is calculated in this manner, and because realized refining margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool. Following are reconciliations of income (loss) before income taxes to realized refining margins:
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| Millions of Dollars, Except as Indicated | ||||||||||||||||||||
| Realized Refining Margins | Atlantic Basin/Europe | Gulf Coast | Central Corridor | † | West Coast | Worldwide | ||||||||||||||
| Year Ended December 31, 2025 | ||||||||||||||||||||
| Income (loss) before income taxes | $ | 402 | 139 | 433 | (1,248) | (274) | ||||||||||||||
Plus: | ||||||||||||||||||||
Taxes other than income taxes | 77 | 108 | 96 | 76 | 357 | |||||||||||||||
Depreciation, amortization and impairments | 218 | 271 | 1,156 | 1,130 | 2,775 | |||||||||||||||
Selling, general and administrative expenses | 31 | 28 | 80 | 31 | 170 | |||||||||||||||
Operating expenses | 1,173 | 1,162 | 952 | 773 | 4,060 | |||||||||||||||
| Equity in losses of affiliates | 9 | — | 70 | — | 79 | |||||||||||||||
| Other segment (income) expense, net | (39) | 2 | (36) | 39 | (34) | |||||||||||||||
| Proportional share of refining gross margins contributed by equity affiliates † | 92 | — | 570 | — | 662 | |||||||||||||||
| Special items: | ||||||||||||||||||||
| Certain tax impacts | (11) | — | — | — | (11) | |||||||||||||||
| Legal settlement | — | — | (181) | — | (181) | |||||||||||||||
| Pending Claims and Settlements | — | — | (123) | — | (123) | |||||||||||||||
Realized refining margins | $ | 1,952 | 1,710 | 3,017 | 801 | 7,480 | ||||||||||||||
Total processed inputs (thousands of barrels) | 192,109 | 193,015 | 160,695 | 73,483 | 619,302 | |||||||||||||||
Adjusted total processed inputs (thousands of barrels)*† | 192,109 | 193,015 | 228,582 | 73,483 | 687,189 | |||||||||||||||
Income (loss) before income taxes per barrel (dollars per barrel)** | $ | 2.09 | 0.72 | 2.70 | (16.99) | (0.44) | ||||||||||||||
Realized refining margins (dollars per barrel)*** | 10.18 | 8.86 | 13.26 | 10.86 | 10.88 | |||||||||||||||
| * 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. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. | ||||||||||||||||||||
† Includes our proportional share of our equity method investment in WRB through September 30, 2025. Beginning on October 1, 2025, 100% of Borger Refinery and Wood River Refinery are included in consolidated results. Refer to Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information. | ||||||||||||||||||||
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| 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 | ||||||||||||
| * 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. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. | |||||||||||||||||
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| 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. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. | |||||||||||||||||
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Marketing
Our realized marketing fuel margins measure the difference between (a) sales and other operating revenues derived from the sale of fuels in our M&S segment and (b) costs of those fuels. The realized marketing fuel margins are adjusted to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized marketing fuel margins are converted to a per-barrel basis by dividing them by sales volumes measured on a barrel basis. We believe realized marketing fuel margin per barrel demonstrates the value uplift our marketing operations provide by optimizing the placement and ultimate sale of our facilities’ fuel production.
Within the M&S segment, the GAAP performance measure most directly comparable to realized marketing fuel margin per barrel is the marketing business’ “income before income taxes per barrel.” Realized marketing fuel margin per barrel excludes items that are typically included in gross margin, such as depreciation and operating expenses, and other items used to determine income before income taxes, such as general and administrative expenses. Because realized marketing fuel margin per barrel excludes these items, and because realized marketing fuel margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool. Following are reconciliations of income before income taxes to realized marketing fuel margins:
| Millions of Dollars, Except as Indicated | |||||||||||||||||||||||
| U.S. | 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. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. | |||||||||||||||||||||||
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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Instrument Market Risk
We and certain of our subsidiaries are exposed to market risks produced by changes in the prices of crude oil, refined petroleum products, NGL, natural gas, renewable feedstocks and renewable fuels, and electric power, as well as fluctuations in interest rates and foreign currency exchange rates. We and certain of our subsidiaries may hold and use derivative contracts to manage these risks.
Commodity Price Risk
Generally, our policy is to remain exposed to the market prices of commodities. 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. In addition to cash settlement prior to contract expiration, certain exchange-traded futures may be settled by physical delivery of the underlying commodity.
•Enable us to use the market knowledge gained from our physical commodity market activities to capture market opportunities, such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades. Derivatives may be utilized to optimize these activities.
•Manage the risk to our cash flows from price exposures on specific crude oil, refined petroleum product, NGL, renewable feedstocks and natural gas transactions.
These objectives optimize the value of our supply chain and may reduce our exposure to fluctuations in market prices.
Our use of derivative instruments is governed by an “Authority Limitations” document approved by our Board of Directors. This document prohibits the use of highly leveraged derivatives or derivative instruments without sufficient market liquidity for comparable valuations, and establishes Value at Risk (VaR) limits. Compliance with these limits is monitored daily by our global risk group.
We use a VaR model to estimate the loss in fair value that could potentially result on a single day from the effect of adverse changes in market conditions on the derivative commodity instruments held or issued. 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. Fixed-rate debt, such as our senior notes, exposes us to changes in the fair value of our debt due to changes in market interest rates. Fixed-rate debt also exposes us to the risk that we may need to refinance maturing debt with new debt at higher rates, or that we may be obligated to pay rates higher than the current market. Variable-rate debt, such as our floating-rate notes or borrowings under our revolving credit facility, exposes us to short-term changes in market rates that impact our interest expense. The following tables provide information about our debt instruments that are sensitive to changes in U.S. interest rates. These tables present principal cash flows and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on effective rates at each reporting date. The carrying amount of our floating-rate debt approximates its fair value. The fair value of the fixed-rate financial instruments is estimated based on observable market prices.
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| 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.
| 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 | ||||||||||||||||||||||||||||
Foreign Currency Risk
We are exposed to foreign currency exchange rate fluctuations related to our international operations. 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. 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.
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.
For additional information about our use of derivative instruments, see Note 19—Derivatives and Financial Instruments, in the Notes to Consolidated Financial Statements.
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CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. You can normally identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “priorities” and similar expressions that convey the prospective nature of events or outcomes, but the absence of such words does not mean a statement is not forward-looking.
We based these forward-looking statements on our current expectations, estimates and projections about us, our operations, our joint ventures and entities in which we have equity interests, as well as the industries in which we and they operate and our sustainability-related plans and goals. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report, as they are not guarantees of future performance and involve assumptions that, while made in good faith, may prove to be incorrect and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in any forward-looking statement. Our sustainability-related goals are not guarantees or promises and may change. Statements regarding our goals are not guarantees or promises that they will be met. The information included in, and any issues identified as material for purposes of, our sustainability reports shall not be considered material for U.S. Securities and Exchange Commission reporting purposes. 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.
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•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. Risk Factors” in this report.
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHILLIPS 66
INDEX TO FINANCIAL STATEMENTS
| Page | |||||
Report of Management | 92 | ||||
Reports of Independent Registered Public Accounting Firm (PCAOB ID: | 93 | ||||
Report of Independent Registered Public Accounting Firm (DCP Midstream, LP) (PCAOB ID: | 97 | ||||
Consolidated Financial Statements of Phillips 66: | |||||
Consolidated Statement of Income for the years ended December 31, 2025, 2024 and 2023 | 98 | ||||
Consolidated Statement of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 | 99 | ||||
Consolidated Balance Sheet at December 31, 2025 and 2024 | 100 | ||||
Consolidated Statement of Cash Flows for the years ended December 31, 2025, 2024 and 2023 | 101 | ||||
Consolidated Statement of Changes in Equity for the years ended December 31, 2025, 2024 and 2023 | 102 | ||||
Notes to Consolidated Financial Statements | 104 | ||||
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Report of Management
Management prepared, and is responsible for, the consolidated financial statements and the other information appearing in this Annual Report. The consolidated financial statements present fairly the company’s financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the United States. In preparing its consolidated financial statements, the company includes amounts that are based on estimates and judgments management believes are reasonable under the circumstances. The company’s financial statements have been audited by Ernst & Young LLP, an independent registered public accounting firm appointed by the Audit and Finance Committee of the Board of Directors. Management has made available to Ernst & Young LLP all of the company’s financial records and related data, as well as the minutes of shareholders’ and directors’ meetings.
Assessment of Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Phillips 66’s internal control system was designed to provide reasonable assurance to the company’s management and directors regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2025. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on this assessment, management concluded the company’s internal control over financial reporting was effective as of December 31, 2025.
Ernst & Young LLP has issued an audit report on the company’s internal control over financial reporting as of December 31, 2025, and their report is included herein.
| /s/ Mark E. Lashier | /s/ Kevin J. Mitchell | |||||||
| Mark E. Lashier | Kevin J. Mitchell | |||||||
| Chairman and Chief Executive Officer | Executive Vice President and | |||||||
| Chief Financial Officer | ||||||||
Date: February 20, 2026
92
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Phillips 66
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Phillips 66 (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits and, for 2023, the report of Deloitte & Touche LLP, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We did not audit the 2023 financial statements of DCP Midstream, LP (DCP LP), a consolidated subsidiary, whose financial statements reflect total revenues constituting 4% of the Company’s revenues and other income for the year ended December 31, 2023. Those financial statements were audited by Deloitte & Touche LLP, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for DCP LP for 2023, is based solely on the report of Deloitte & Touche LLP.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 20, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits and the report of Deloitte & Touche LLP provide a reasonable basis for our opinion.
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Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Audit and Finance Committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
WRB Refining LP Acquisition | ||||||||
| Description of the Matter | As discussed in Note 5 to the financial statements, the Company entered into a definitive agreement to acquire the 50% equity interest in WRB Refining LP it did not already own from subsidiaries of Cenovus Energy Inc. The transaction closed on October 1, 2025 and was accounted for as a business combination. As a result of the transaction, the Company recognized $2.8 billion of properties, plants and equipment, which was composed primarily of refining assets. Auditing management's accounting for the WRB Refining LP acquisition was complex due to the significant estimation required to determine the fair value of the refining assets. In particular, the fair value estimates for certain refining assets were sensitive to economic obsolescence, which had a significant effect on the fair value estimates. | |||||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over the valuation of the refining assets related to the acquisition. For example, we tested controls over management’s review of the valuation models and the underlying assumptions used to develop estimated fair values of these assets. To test the estimated fair value of the refining assets, our audit procedures included, among others, evaluating the Company’s selection of the valuation methodology, the underlying assumptions used by the Company, and the completeness and accuracy of the underlying data supporting the assumptions and estimates. We involved our valuation specialists to assist in assessing the appropriateness of the valuation methodology used by the Company, to develop an expected range of values to assess the reasonableness of the Company’s estimates, and to evaluate the effects of economic obsolescence on the fair value estimates. | |||||||
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2011.
February 20, 2026
94
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Phillips 66
Opinion on Internal Control Over Financial Reporting
We have audited Phillips 66’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Phillips 66 (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes, and our report dated February 20, 2026 expressed an unqualified opinion thereon, based on our audit and the report of Deloitte & Touche LLP.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included under the heading “Assessment of Internal Control Over Financial Reporting” in the accompanying “Report of Management.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
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Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Houston, Texas
February 20, 2026
96
Report of Independent Registered Public Accounting Firm
To the Board of Directors of DCP Midstream GP, LLC and the Unitholders of DCP Midstream, LP
Opinion on the Financial Statements
We have audited the consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”) of DCP Midstream, LP and subsidiaries (the “Partnership”) (not presented herein). In our opinion, the financial statements present fairly, in all material respects the results of the Partnership’s operations and its cash flows for the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We did not audit the financial statements of Gulf Coast Express Pipeline, LLC, the Partnership’s investment which is accounted for by use of the equity method. The consolidated financial statements of the Partnership include its equity earnings in Gulf Coast Express Pipeline, LLC of $68 million for the year ended December 31, 2023. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Gulf Coast Express Pipeline, LLC is based solely on the report of the other auditors.
Basis for Opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit and the report of the other auditors provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
February 21, 2024
We began serving as the Partnership’s auditor in 2004. In 2024 we became the predecessor auditor.
97
| Consolidated Statement of Income | Phillips 66 | ||||
| Millions of Dollars | |||||||||||||||||
| Years Ended December 31 | 2025 | 2024 | 2023 | ||||||||||||||
| Revenues and Other Income | |||||||||||||||||
| Sales and other operating revenues | $ | ||||||||||||||||
| Equity in earnings of affiliates | |||||||||||||||||
| Net gain on dispositions | |||||||||||||||||
| Other income | |||||||||||||||||
| Total Revenues and Other Income | |||||||||||||||||
| Costs and Expenses | |||||||||||||||||
| Purchased crude oil and products | |||||||||||||||||
| Operating expenses | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Impairments | |||||||||||||||||
| Taxes other than income taxes | |||||||||||||||||
| Accretion on discounted liabilities | |||||||||||||||||
| Interest and debt expense | |||||||||||||||||
| Foreign currency transaction (gains) losses | ( | ||||||||||||||||
| Total Costs and Expenses | |||||||||||||||||
| Income before income taxes | |||||||||||||||||
| Income tax expense | |||||||||||||||||
| Net Income | |||||||||||||||||
| Less: net income attributable to noncontrolling interests | |||||||||||||||||
| Net Income Attributable to Phillips 66 | $ | ||||||||||||||||
Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars) | |||||||||||||||||
| Basic | $ | ||||||||||||||||
| Diluted | |||||||||||||||||
Weighted-Average Common Shares Outstanding (thousands) | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
| See Notes to Consolidated Financial Statements. | |||||||||||||||||
98
| Consolidated Statement of Comprehensive Income | Phillips 66 | ||||||||||||||||
| Millions of Dollars | |||||||||||||||||
| Years Ended December 31 | 2025 | 2024 | 2023 | ||||||||||||||
| Net Income | $ | ||||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||
| Defined benefit plans | |||||||||||||||||
| Net actuarial gain (loss) arising during the period | ( | ( | |||||||||||||||
| Amortization of net actuarial loss and settlements | |||||||||||||||||
| Plans sponsored by equity affiliates | ( | ( | |||||||||||||||
| Divestiture | ( | ||||||||||||||||
| Income taxes on defined benefit plans | ( | ||||||||||||||||
| Defined benefit plans, net of income taxes | ( | ||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||
| Income taxes on foreign currency translation adjustments | ( | ( | |||||||||||||||
| Foreign currency translation adjustments, net of income taxes | ( | ||||||||||||||||
| Cash flow hedges | ( | ||||||||||||||||
| Income taxes on hedging activities | |||||||||||||||||
| Hedging activities, net of income taxes | ( | ||||||||||||||||
| Other Comprehensive Income (Loss), Net of Income Taxes | ( | ||||||||||||||||
| Comprehensive Income | |||||||||||||||||
| Less: comprehensive income attributable to noncontrolling interests | |||||||||||||||||
| Comprehensive Income Attributable to Phillips 66 | $ | ||||||||||||||||
| See Notes to Consolidated Financial Statements. | |||||||||||||||||
99
| Consolidated Balance Sheet | Phillips 66 | ||||||||||
| Millions of Dollars | |||||||||||
| At December 31 | 2025 | 2024 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | ||||||||||
Accounts and notes receivable (net of allowances of $ $ | |||||||||||
| Accounts and notes receivable—related parties | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total Current Assets | |||||||||||
| Investments and long-term receivables | |||||||||||
| Net properties, plants and equipment | |||||||||||
| Goodwill | |||||||||||
| Intangibles | |||||||||||
| Other assets | |||||||||||
| Total Assets | $ | ||||||||||
| Liabilities | |||||||||||
| Accounts payable | $ | ||||||||||
| Accounts payable—related parties | |||||||||||
| Short-term debt | |||||||||||
| Accrued income and other taxes | |||||||||||
| Employee benefit obligations | |||||||||||
| Other accruals | |||||||||||
| Total Current Liabilities | |||||||||||
| Long-term debt | |||||||||||
| Asset retirement obligations and accrued environmental costs | |||||||||||
| Deferred income taxes | |||||||||||
| Employee benefit obligations | |||||||||||
| Other liabilities and deferred credits | |||||||||||
| Total Liabilities | |||||||||||
| Equity | |||||||||||
Common stock ( Issued (2025— | |||||||||||
| Par value | |||||||||||
| Capital in excess of par | |||||||||||
Treasury stock (at cost: 2025— | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Stockholders’ Equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total Equity | |||||||||||
| Total Liabilities and Equity | $ | ||||||||||
| See Notes to Consolidated Financial Statements. | |||||||||||
100
| Consolidated Statement of Cash Flows | Phillips 66 | ||||||||||||||||
| Millions of Dollars | |||||||||||||||||
| Years Ended December 31 | 2025 | 2024 | 2023 | ||||||||||||||
| Cash Flows From Operating Activities | |||||||||||||||||
| Net income | $ | ||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Impairments | |||||||||||||||||
| Accretion on discounted liabilities | |||||||||||||||||
| Deferred income taxes | ( | ||||||||||||||||
| Undistributed equity earnings | ( | ( | |||||||||||||||
| Loss (gain) on early redemption of debt | ( | ||||||||||||||||
| Net gain on dispositions | ( | ( | ( | ||||||||||||||
| Unrealized investment loss | |||||||||||||||||
| Other | ( | ( | |||||||||||||||
| Working capital adjustments | |||||||||||||||||
| Accounts and notes receivable | ( | ( | |||||||||||||||
| Inventories | ( | ( | |||||||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||||||||
| Accounts payable | ( | ( | ( | ||||||||||||||
| Taxes and other accruals | ( | ( | |||||||||||||||
| Net Cash Provided by Operating Activities | |||||||||||||||||
| Cash Flows From Investing Activities | |||||||||||||||||
| Capital expenditures and investments | ( | ( | ( | ||||||||||||||
| Acquisitions, net of cash acquired | ( | ( | ( | ||||||||||||||
| Purchases of government obligations | ( | ||||||||||||||||
| Return of investments in equity affiliates | |||||||||||||||||
| Proceeds from asset dispositions | |||||||||||||||||
| Other | ( | ||||||||||||||||
| Net Cash Used in Investing Activities | ( | ( | ( | ||||||||||||||
| Cash Flows From Financing Activities | |||||||||||||||||
| Issuance of debt | |||||||||||||||||
| Repayment of debt | ( | ( | ( | ||||||||||||||
| Issuance of common stock | |||||||||||||||||
| Repurchase of common stock | ( | ( | ( | ||||||||||||||
| Dividends paid on common stock | ( | ( | ( | ||||||||||||||
| Distributions to noncontrolling interests | ( | ( | ( | ||||||||||||||
| Repurchase of noncontrolling interests | ( | ||||||||||||||||
| Contributions from noncontrolling interests | |||||||||||||||||
| Other | ( | ( | ( | ||||||||||||||
| Net Cash Used in Financing Activities | ( | ( | ( | ||||||||||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | ( | ||||||||||||||||
| Net Change in Cash and Cash Equivalents | ( | ( | ( | ||||||||||||||
| Cash and cash equivalents at beginning of year | |||||||||||||||||
| Cash and Cash Equivalents at End of Year | $ | ||||||||||||||||
| See Notes to Consolidated Financial Statements. | |||||||||||||||||
101
| Consolidated Statement of Changes in Equity | Phillips 66 | ||||||||||||||||||||||
| Millions of Dollars | |||||||||||||||||||||||
| Attributable to Phillips 66 | |||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||
| Par Value | Capital in Excess of Par | Treasury Stock | Retained Earnings | Accum. Other Comprehensive Loss | Noncontrolling Interests | Total | |||||||||||||||||
| December 31, 2022 | $ | ( | ( | ||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||
| Dividends paid on common stock | — | — | — | ( | — | — | ( | ||||||||||||||||
| Repurchase of common stock | — | — | ( | — | — | — | ( | ||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | ( | ( | ||||||||||||||||
| Acquisition of noncontrolling interest in DCP Midstream, LP | — | ( | — | — | — | ( | ( | ||||||||||||||||
| Benefit plan activity and other | — | — | ( | — | |||||||||||||||||||
| December 31, 2023 | ( | ( | |||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | — | ( | ||||||||||||||||
| Dividends paid on common stock | — | — | — | ( | — | — | ( | ||||||||||||||||
| Repurchase of common stock | — | — | ( | — | — | — | ( | ||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | ( | ( | ||||||||||||||||
| Benefit plan activity | — | — | ( | — | — | ||||||||||||||||||
| December 31, 2024 | ( | ( | |||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||
| Dividends paid on common stock | — | — | — | ( | — | — | ( | ||||||||||||||||
| Repurchase of common stock | — | — | ( | — | — | — | ( | ||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | ( | ( | ||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | ||||||||||||||||||
| Benefit plan activity | — | — | ( | — | — | ||||||||||||||||||
| December 31, 2025 | $ | ( | ( | ||||||||||||||||||||
102
| Shares | ||||||||||||||
| Common Stock Issued | Treasury Stock | |||||||||||||
| December 31, 2022 | ||||||||||||||
| Repurchase of common stock | — | |||||||||||||
| Shares issued—share-based compensation | — | |||||||||||||
| December 31, 2023 | ||||||||||||||
| Repurchase of common stock | — | |||||||||||||
| Shares issued—share-based compensation | — | |||||||||||||
| December 31, 2024 | ||||||||||||||
| Repurchase of common stock | — | |||||||||||||
| Shares issued—share-based compensation | — | |||||||||||||
| December 31, 2025 | ||||||||||||||
| Dollars | ||||||||||||||
| Years Ended December 31 | Dividends Paid Per Share of Common Stock | |||||||||||||
| 2023 | $ | |||||||||||||
| 2024 | ||||||||||||||
| 2025 | $ | |||||||||||||
| See Notes to Consolidated Financial Statements. | ||||||||||||||
103
| Notes to Consolidated Financial Statements | Phillips 66 | ||||
Note 1—Summary of Significant Accounting Policies
Consolidation Principles and Investments
Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries and variable interest entities (VIEs) where we are the primary beneficiary. Undivided interests in pipelines, natural gas plants and terminals are consolidated on a proportionate basis. See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for further discussion about a significant VIE that we began consolidating in August 2022.
The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates’ operating and financial policies, including VIEs, of which we are not the primary beneficiary. Other securities and investments are generally carried at fair value, or cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. See Note 9—Investments, Loans and Long-Term Receivables, for further discussion on our significant unconsolidated VIEs.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
Foreign Currency
Adjustments resulting from the process of translating financial statements with foreign functional currencies into U.S. dollars are included in accumulated other comprehensive income (loss) in stockholders’ equity. Foreign currency transaction gains and losses result from remeasuring monetary assets and liabilities denominated in a foreign currency into the functional currency of our subsidiary holding the asset or liability. We include these transaction gains and losses in current earnings (loss). Most of our foreign operations use their local currency as the functional currency.
Cash Equivalents
Cash equivalents are highly liquid, short-term investments that are readily convertible to known amounts of cash and will mature within 90 days or less from the date of acquisition. We carry these investments at cost plus accrued interest.
Inventories
104
Fair Value Measurements
Derivative Instruments
Derivative instruments, except those designated as normal purchases and normal sales, are recorded on the balance sheet at fair value. We have master netting agreements with most of our exchange-cleared instrument counterparties and certain of our counterparties to other commodity instrument contracts (e.g., physical commodity forward contracts). We have elected to net derivative assets and liabilities with the same counterparty on the balance sheet if the legal right of offset exists and certain other criteria are met. When applicable, we also net collateral payables and receivables against derivative assets and derivative liabilities, respectively.
Recognition and classification of the gain or loss that results from recording and adjusting a derivative to fair value depends on the purpose for issuing or holding the derivative. All realized and unrealized gains and losses from derivative instruments for which we do not apply hedge accounting are immediately recognized in our consolidated statement of income. Unrealized gains or losses from derivative instruments that qualify for and are designated as cash flow hedges are recognized in other comprehensive income (loss) and appear on the balance sheet in accumulated other comprehensive income (loss) until the hedged transactions are recognized in earnings. However, to the extent the change in the fair value of a derivative instrument exceeds the change in the anticipated cash flows of the hedged transaction, the excess gain or loss is recognized immediately in earnings.
Loans and Long-Term Receivables
We enter into agreements with other parties to pursue business opportunities, which may require us to provide loans or advances to certain affiliated and nonaffiliated companies. Loans are recorded when cash is transferred or seller financing is provided to the affiliated or nonaffiliated company pursuant to a loan agreement. The loan balance will increase as interest is earned on the outstanding loan balance and will decrease as interest and principal payments are received. Interest is earned at the loan agreement’s stated interest rate. Loans and long-term receivables are evaluated for impairment based on an expected credit loss assessment.
Impairment of Investments in Unconsolidated Affiliates
Investments in unconsolidated affiliates accounted for under the equity method are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred. When indicators exist, the fair value is estimated and compared to the investment carrying value. If any impairment is judgmentally determined to be other than temporary, the carrying value of the investment is written down to fair value. The fair value of the impaired investment is determined based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and observed market earnings multiples of comparable companies.
Depreciation and Amortization
Depreciation and amortization of properties, plants and equipment (PP&E) are determined by either the individual-unit-straight-line method or the group-straight-line method (for those individual units that are highly integrated with other units).
Capitalized Interest
A portion of interest from external borrowings is capitalized on major projects with an expected construction period of one year or longer. Capitalized interest is added to the cost of the related asset, and is depreciated over the useful life of the related asset.
105
Impairment of Properties, Plants and Equipment
PP&E used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group. If indicators of potential impairment exist, an undiscounted cash flow test is performed. If the sum of the undiscounted expected future before-tax cash flows of an asset group is less than the carrying value of the asset group, including applicable liabilities, the carrying value of the PP&E included in the asset group is written down to estimated fair value and the write down is reported in the “Impairments” line item on our consolidated statement of income in the period in which the impairment determination is made. Individual assets are grouped for impairment testing purposes at the lowest level for which identifiable cash flows are available. Because there is usually a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined using one or more of the following methods: the present values of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants; a market multiple of earnings for similar assets; historical market transactions for similar assets, adjusted using principal market participant assumptions when necessary; or replacement cost adjusted for physical deterioration and economic obsolescence. Long-lived assets held for sale are accounted for at the lower of amortized cost or fair value, less cost to sell, with fair value determined using a binding negotiated price, if available, estimated replacement cost, or present value of expected future cash flows as previously described.
The expected future cash flows used for impairment reviews and related fair value calculations are based on estimated future volumes, prices, costs, margins and capital project decisions, considering all available evidence at the date of review.
Property Dispositions
When complete units of depreciable property are sold, the asset cost and related accumulated depreciation are eliminated, with any gain or loss reflected in the “Net gain on dispositions” line item on our consolidated statement of income. When less than complete units of depreciable property are disposed of or retired, the difference between asset cost and salvage value is charged or credited to accumulated depreciation.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination. Goodwill is not amortized, but is assessed for impairment annually and when events or changes in circumstance indicate that the fair value of a reporting unit with goodwill is below its carrying value. The impairment assessment requires allocating goodwill and other assets and liabilities to reporting units. The fair value of each reporting unit is determined and compared to the book value of the reporting unit. If the fair value of the reporting unit is less than the book value, an impairment is recognized for the amount by which the book value exceeds the reporting unit’s fair value. A goodwill impairment cannot exceed the total amount of goodwill allocated to that reporting unit. For purposes of assessing goodwill for impairment, we have three reporting units with goodwill balances at our 2025 testing date: Marketing and Specialties (M&S), Transportation and Natural Gas Liquids (NGL).
Intangible Assets Other Than Goodwill
Intangible assets with finite useful lives are amortized using the straight-line method over their useful lives. Intangible assets with indefinite useful lives are not amortized, but are tested at least annually for impairment. Each reporting period, we evaluate intangible assets with indefinite useful lives to determine whether events and circumstances continue to support this classification. Indefinite-lived intangible assets are considered impaired if their fair value is lower than their net book value. The fair value of intangible assets is determined based on quoted market prices in active markets, if available. If quoted market prices are not available, the fair value of intangible assets is determined based upon the present values of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants, or upon estimated replacement cost, if expected future cash flows from the intangible asset are not determinable.
106
Asset Retirement Obligations
When we have a legal obligation to incur costs to retire an asset, we record a liability in the period in which the obligation was incurred provided that a reasonable estimate of fair value can be made. If a reasonable estimate of fair value cannot be made at the time the obligation arises, we record the liability when sufficient information is available to estimate its fair value. When a liability is initially recorded, we capitalize the costs by increasing the carrying amount of the related PP&E. Over time, the liability is increased for changes in present value, and the capitalized costs in PP&E are depreciated over the useful life of the related assets. If our estimate of the liability changes after initial recognition, we record an adjustment to the liability and PP&E.
Environmental Costs
Environmental expenditures are expensed or capitalized, depending upon their future economic benefit. Expenditures relating to an existing condition caused by past operations, and those having no future economic benefit, are expensed. When environmental assessments or cleanups are probable and the costs can be reasonably estimated, environmental expenditures are accrued on an undiscounted basis (unless acquired in a business combination). Recoveries of environmental remediation costs from other parties, such as state reimbursement funds, are recorded as a reduction to environmental expenditures.
Guarantees
The fair value of a guarantee is determined and recorded as a liability at the time the guarantee is given. The initial liability is subsequently reduced as we are released from exposure under the guarantee. We amortize the guarantee liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of guarantee. We amortize the guarantee liability to the related statement of income line item based on the nature of the guarantee. In cases where the guarantee term is indefinite, we reverse the liability when we have information to support the reversal. When the performance on the guarantee becomes probable and the liability can be reasonably estimated, we accrue a separate liability for the excess amount above the guarantee’s book value based on the facts and circumstances at that time. We reverse the fair value liability only when there is no further exposure under the guarantee.
Treasury Stock
We record treasury stock purchases at cost, which includes related transaction costs and excise taxes. Amounts are recorded as reductions of stockholders’ equity on the consolidated balance sheet. Common stock reissued from treasury stock is valued based on the average cost of historical repurchases.
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Revenue Recognition
Our revenues are primarily associated with sales of refined petroleum products and renewable fuels, crude oil, NGL and natural gas. Each gallon, or other unit of measure of product, is separately identifiable and represents a distinct performance obligation to which a transaction price is allocated. The transaction prices of our contracts with customers are either fixed or variable, with variable pricing based upon various market indices. For our contracts that include variable consideration, we utilize the variable consideration allocation exception, whereby the variable consideration is only allocated to the performance obligations that are satisfied during the period. The related revenue is recognized at a point in time when control passes to the customer, which is when title and the risk of ownership pass to the customer and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry. The payment terms with our customers vary based on the product or service provided, but usually are 30 days or less.
Revenues associated with pipeline transportation services are recognized at a point in time when the volumes are delivered based on contractual rates. Revenues associated with terminaling and storage services are recognized over time as the services are performed based on throughput volume or capacity utilization at contractual rates.
Revenues associated with transactions commonly called buy/sell contracts, in which the purchase and sale of inventory with the same counterparty are entered into in contemplation of one another, are combined and reported in the “Purchased crude oil and products” line item on our consolidated statement of income (i.e., these transactions are recorded net).
Taxes Collected from Customers and Remitted to Governmental Authorities
Shipping and Handling Costs
We have elected to account for shipping and handling costs as fulfillment activities and include these activities in the “Purchased crude oil and products” line item on our consolidated statement of income. Freight costs billed to customers are recorded in “Sales and other operating revenues.”
Maintenance and Repairs
Costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Major refinery maintenance turnarounds are expensed as incurred.
Share-Based Compensation
108
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date. Income tax effects are released from accumulated other comprehensive loss to retained earnings, when applicable, on an individual item basis as those items are reclassified into income. Interest related to unrecognized income tax benefits is reflected in the “Interest and debt expense” line item, and penalties are reported in the “Operating expenses” or “Selling, general and administrative expenses” line items on our consolidated statement of income. We have elected to treat the global intangible low-taxed income (GILTI) tax as a period expense.
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. The excess or shortfall of the purchase price when compared to the fair value of the net tangible and identifiable intangible assets acquired, if any, is recorded as goodwill or a bargain purchase gain, respectively. We use available information to make these fair value determinations and engage third-party specialists in the valuation process as necessary.
Note 2—Changes in Accounting Principles
Effective January 1, 2025, we adopted ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures,” which enhances the transparency, effectiveness, and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The adoption of this pronouncement did not have an impact on our consolidated financial statements; however, we applied the new disclosure requirements retrospectively, so all prior period disclosures have been adjusted to reflect the new disclosure requirements. See additional and updated disclosures within Note 25—Income Taxes and Note 27—Cash Flow Information.
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Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers
DCP Midstream, LLC and Gray Oak Holdings LLC Merger (DCP Midstream Merger)
On August 17, 2022, we and our co-venturer, Enbridge Inc. (Enbridge), agreed to merge DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings), with DCP Midstream as the surviving entity. Prior to the DCP Midstream Merger, we and Enbridge each held a 50 28.26 %. DCP LP is a VIE because its limited partners do not have the ability to remove its general partner with a simple majority vote, nor do its limited partners have substantive participating rights in the significant decisions made in the ordinary course of business. DCP Midstream ultimately consolidates DCP LP because one of its wholly owned subsidiaries is the primary beneficiary of DCP LP. We and Enbridge also held 65 % and 35 % interests, respectively, in Gray Oak Holdings, whose primary asset was a 65 % noncontrolling interest in Gray Oak Pipeline, LLC (Gray Oak Pipeline). Our and Enbridge’s indirect economic interests in Gray Oak Pipeline were 42.25 % and 22.75 %, respectively. We had voting control over and consolidated Gray Oak Holdings and reported Gray Oak Holdings’ 65 % interest in Gray Oak Pipeline as an equity investment and Enbridge’s interest in Gray Oak Holdings as a noncontrolling interest.
In connection with the DCP Midstream Merger, we and Enbridge entered into a Third Amended and Restated Limited Liability Company Agreement of DCP Midstream (Amended and Restated LLC Agreement), which realigned the members’ economic interests and governance responsibilities. Under the Amended and Restated LLC Agreement, two classes of membership interests in DCP Midstream were created, Class A and Class B, that are intended to track the assets, liabilities, revenues and expenses of the following operating segments of DCP Midstream:
•Class A Segment comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities (DCP Midstream Class A Segment).
•Class B Segment comprised of the business, activities, assets and liabilities of Gray Oak Pipeline (DCP Midstream Class B Segment).
We hold a 76.64 % Class A membership interest, which represents an indirect economic interest in DCP LP of 43.3 %, and a 10 % Class B membership interest, which represents an indirect economic interest in Gray Oak Pipeline of 6.5 %. Enbridge holds the remaining Class A and Class B membership interests. We have been designated as the managing member of DCP Midstream Class A Segment and are responsible for conducting, directing and managing all activities associated with this segment, except as limited in certain instances. Enbridge has been designated as the managing member of DCP Midstream Class B Segment. Earnings and distributions from each segment are allocated to the members based on their membership interest in each membership class, except as otherwise provided.
DCP Midstream Class A Segment and DCP Midstream Class B Segment were determined to be silos under the variable interest consolidation model. As a result, DCP Midstream was also determined to be a VIE. We determined that we are the primary beneficiary of DCP Midstream Class A Segment because of the governance rights granted to us under the Amended and Restated LLC Agreement as managing member of the segment.
We hold a 33.33 % direct ownership interest in DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills). DCP LP holds the remaining 66.67 % ownership interest in these entities. As a result of the governance rights granted to us over DCP Midstream Class A Segment and the governance rights we hold through our direct ownership interests, we obtained controlling financial interests in these entities in connection with the DCP Midstream Merger. As a result of the DCP Midstream Merger, our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased from 52.2 % to 62.2 %.
Starting on August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills and reporting the direct and indirect economic interests held by others in these entities as noncontrolling interests on our financial statements.
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We account for our remaining indirect economic interest in Gray Oak Pipeline, now held through DCP Midstream Class B Segment, using the equity method of accounting. As a result of the DCP Midstream Merger, we derecognized Enbridge’s noncontrolling interest in Gray Oak Holdings.
DCP Midstream, LP Merger (DCP LP Merger)
On June 15, 2023, we completed the acquisition of all publicly held common units of DCP LP and eliminated the public common unit noncontrolling interest in our consolidated financial statements from the DCP LP Merger date, forward, pursuant to the terms of the Agreement and Plan of Merger, dated as of January 5, 2023 (DCP LP Merger Agreement). The DCP LP Merger Agreement was entered into with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries merged with and into DCP LP, with DCP LP surviving as a Delaware limited partnership. Under the terms of the DCP LP Merger Agreement, at the effective time of the DCP LP Merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and its subsidiaries) issued and outstanding as of immediately prior to the effective time was converted into the right to receive $41.75 per common unit in cash. We paid $3,796 million in cash consideration to common unitholders, funded with a combination of available cash and debt proceeds. The DCP LP Merger was accounted for as an equity transaction. The DCP LP Merger increased our aggregate direct and indirect economic interest in DCP LP from 43.3 % to 86.8 % and our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased from 62.2 % to 91.2 %.
DCP Midstream Class A Segment
DCP Midstream Class A Segment is a VIE and we are the primary beneficiary. DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities.
DCP LP is a master limited partnership whose operations currently include producing and fractionating NGL; gathering, compressing, treating and processing natural gas; recovering condensate; and transporting, trading, marketing and storing natural gas and NGL.
The most significant assets of DCP Midstream Class A Segment that are available to settle only its obligations, along with its most significant liabilities for which its creditors do not have recourse to Phillips 66’s general credit, were:
| Millions of Dollars | |||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||
| Accounts receivable | $ | ||||||||||
| Net properties, plants and equipment | |||||||||||
| Investments and long-term receivables | |||||||||||
| Accounts payable | |||||||||||
| Short-term debt | |||||||||||
| Long-term debt | |||||||||||
Preferred Units
On October 16, 2023, DCP LP redeemed its Series C preferred units at the aggregated liquidation preference of $110 million, which approximated the book value of the preferred units. On June 15, 2023, DCP LP redeemed its Series B preferred units at the aggregated liquidation preference of $161 million, which approximated book value of the preferred units.
Distributions
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Note 4—Restructuring
Los Angeles Refinery
In October 2024, we announced our intention to cease operations and begin idling the facilities at our Los Angeles Refinery in the fourth quarter of 2025. In the fourth quarter of 2025, consistent with our plan, we began idling the facility and ceased fuel production. We have submitted redevelopment project applications for the facilities, initiating the review process and allowing us to continue pursuing the redevelopment of the property for future uses. As a result of the decision to cease operations and begin idling the facilities, the following impacts were recorded in our Refining segment:
•In 2024, we assessed the Los Angeles Refinery asset group for impairment and concluded that the carrying value of the asset group was recoverable. However, the estimated useful lives of the Los Angeles Refinery assets were shortened to reflect the plan to cease operations and begin idling the assets in the fourth quarter of 2025. As of December 31, 2025, the carrying values of the net PP&E and intangible assets were depreciated to the estimated salvage value of $241 million. Total depreciation related to the Los Angeles Refinery assets for the years ended December 31, 2025 and December 31, 2024, was $1,062 million and $350 million, including $964 million and $253 million of accelerated depreciation, respectively. This accelerated depreciation is included within the “Depreciation and amortization” line item on our consolidated statement of income for the years ended December 31, 2025 and 2024.
•Our asset retirement obligations (AROs) at the Los Angeles Refinery were $253 million as of December 31, 2025, primarily reflecting asbestos abatement and decommissioning of assets. The estimation of asset retirement obligations requires judgment and is subject to changes in the underlying assumptions. Depreciation of the related capitalized asset retirement costs was also recorded through the fourth quarter of 2025, and the amounts for the years ended December 31, 2025 and 2024, are reflected in the accelerated depreciation discussed above.
•We accrued $69 million35 million write down of material and supplies inventory. These expenses are included within the “Operating expenses” line item on our consolidated statement of income for the year ended December 31, 2025.
•We recorded $44 million of severance costs, which are included within the “Operating expenses” line item on our consolidated statement of income for the year ended December 31, 2024.
In April 2022, we began a multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure. For the year ended December 31, 2023, we recorded restructuring costs 177 million primarily related to consulting fees and severance costs. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in Corporate and Other.
In addition, for the year ended December 31, 2023, we recorded restructuring costs of $38 million associated with the integration of DCP Midstream Class A Segment primarily related to severance and contract exit costs. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Midstream segment.
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Note 5—Business Combinations
Refining Acquisition
On October 1, 2025, we acquired the remaining 50 % equity interest in WRB Refining LP (WRB) from subsidiaries of Cenovus Energy Inc. (Cenovus) for total cash consideration of $1.3 billion, subject to post-closing adjustments. This acquisition will enable full integration with our broader value chain and expand our position in the Central Corridor region.
The components of the fair value of the WRB acquisition consideration are:
| Millions of Dollars | |||||
| Cash paid to Cenovus | $ | ||||
| Fair value of previously held equity interest in WRB | |||||
| Settlement of relationships with Phillips 66 and WRB | |||||
| Total acquisition consideration | $ | ||||
The acquisition date fair value of the previously held equity interest in WRB was determined in conjunction with the impairment recorded in the third quarter of 2025. See Note 9—Investments, Loans and Long-Term Receivables for additional information on the impairment. See Note 20—Fair Value Measurements for additional information on the determination of fair value.
We accounted for this acquisition as a business combination and provisionally recorded $2,767 million of PP&E; $1,200 million of inventory; $54 million of other long-term assets; $9 million of intangibles; $450 million of short-term debt assumed at acquisition and also fully repaid on October 1, 2025; $119 million of net working capital deficit (excluding inventory and short-term debt); $34 million of AROs and accrued environmental costs; $21 million of other long-term liabilities; and $5 million of deferred income tax liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize the accounting for this acquisition.
Midstream Acquisitions
On April 1, 2025, we acquired all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, together with their respective subsidiaries (collectively referred to herein as Coastal Bend), which own various long haul NGL pipelines, fractionation facilities and distribution systems, for total consideration of $2.2 billion, net of cash acquired. This acquisition further enhances our wellhead-to-market strategy. For this acquisition, we provisionally recorded $2,224 million of PP&E; $4 million of other assets; $4 million of net working capital (excluding cash); $33 million of other long-term liabilities; and $4 million of AROs. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize the accounting for this acquisition.
On July 1, 2024, we acquired Pinnacle Midland Parent LLC (referred to herein as Dos Picos) to expand our natural gas gathering and processing operations in the Permian Basin for total cash consideration of $565 million. This acquisition expands our natural gas gathering and processing operations in the Permian Basin. We finalized the valuation of the assets acquired and liabilities assumed during the three months ended June 30, 2025. For this acquisition, we recorded $325 million of PP&E, including finance lease right of use assets; $256 million of amortizable intangible assets, primarily customer relationships; $21 million of goodwill; $18 million of net working capital deficit; $13 million of AROs; and $6 million of finance lease liabilities.
Marketing and Specialties Acquisitions
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Note 6—Sales and Other Operating Revenues
Disaggregated Revenues
The following tables present our disaggregated sales and other operating revenues for the years ended December 31:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Product Line and Services | |||||||||||||||||
| Refined petroleum products and renewable fuels | $ | ||||||||||||||||
| Crude oil resales | |||||||||||||||||
| NGL and natural gas | |||||||||||||||||
| Services and other* | |||||||||||||||||
| Consolidated sales and other operating revenues | $ | ||||||||||||||||
| Geographic Location** | |||||||||||||||||
| United States | $ | ||||||||||||||||
| United Kingdom | |||||||||||||||||
| Germany | |||||||||||||||||
| Other countries | |||||||||||||||||
| Consolidated sales and other operating revenues | $ | ||||||||||||||||
* Includes derivatives-related activities. See Note 19—Derivatives and Financial Instruments for additional information. | |||||||||||||||||
| ** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues. | |||||||||||||||||
Contract-Related Assets and Liabilities
At December 31, 2025 and 2024, receivables from contracts with customers were $7,781 million and $8,615 million, respectively. Significant noncustomer balances, such as buy/sell receivables and excise tax receivables, were excluded from these amounts.
Our contract-related assets also include payments we make to our marketing customers related to incentive programs. An incentive payment is initially recognized as an asset and subsequently amortized as a reduction to revenue over the contract term, which generally ranges from 5 to 15 years. At December 31, 2025 and 2024, our asset balances related to such payments were $820 million and $643 million, respectively.
Our contract liabilities primarily represent advances from our customers prior to product or service delivery. At December 31, 2025 and 2024, contract liabilities were $198 million and $232 million, respectively.
Remaining Performance Obligations
Most of our contracts with customers are spot contracts or term contracts with only variable consideration. We do not disclose remaining performance obligations for these contracts as the expected duration is one year or less or because the variable consideration has been allocated entirely to an unsatisfied performance obligation. We also have certain contracts in our Midstream segment that include minimum volume commitments with fixed pricing. At December 31, 2025, the remaining performance obligations related to these minimum volume commitment contracts amounted to $854 million. This amount excludes variable consideration and estimates of variable rate escalation clauses in our contracts with customers, and is expected to be recognized through 2036 with a weighted average remaining life of four years as of December 31, 2025.
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Note 7—Credit Losses
We are exposed to credit losses primarily through our sales of refined petroleum products, renewable fuels, renewable feedstocks, crude oil, NGL and natural gas. We assess each counterparty’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the counterparty’s established credit rating or our assessment of the counterparty’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risk, and business strategy in our evaluation. A credit limit is established for each counterparty based on the outcome of this review. We may require collateralized asset support or a prepayment to mitigate credit risk.
We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities include timely account reconciliations, dispute resolution and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. In addition, when events and circumstances arise that may affect certain counterparties’ abilities to fulfill their obligations, we enhance our credit monitoring, and we may seek collateral to support some transactions or require prepayments from higher-risk counterparties.
At December 31, 2025 and 2024, we reported $9,771 million and $11,033 million of accounts and notes receivable, net of allowances of $68 million and $70 million, respectively. Based on an aging analysis at December 31, 2025, more than 95 % of our accounts receivable were outstanding less than 60 days.
We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt and accounts receivable sold under a securitization facility, as well as standby letters of credit. See Note 15—Debt, Note 17—Guarantees, and Note 18—Contingencies and Commitments for additional information on these off-balance sheet exposures.
Note 8—Inventories
Inventories at December 31 consisted of the following:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Crude oil and products | $ | ||||||||||
| Materials and supplies | |||||||||||
| $ | |||||||||||
Inventories valued on the LIFO basis totaled $4,461 million and $3,443 million at December 31, 2025 and 2024, respectively. The increase in inventories in 2025 was primarily related to the consolidation of assets following our acquisition of the remaining ownership interest of WRB. See Note 5—Business Combinations for additional information. The estimated excess of current replacement cost over LIFO cost of inventories amounted to approximately $3.6 billion and $4.9 billion at December 31, 2025 and 2024, respectively.
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Note 9—Investments, Loans and Long-Term Receivables
Components of investments and long-term receivables at December 31 were:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Equity investments | $ | ||||||||||
| Other investments | |||||||||||
| Loans and long-term receivables | |||||||||||
| $ | |||||||||||
Equity Investments
The following table represents our significant investments in unconsolidated affiliates at December 31:
At December 31, 2025 | Millions of Dollars | ||||||||||||||||||||||
| VIE | Ownership Percentage | 2025 | 2024 | ||||||||||||||||||||
| Chevron Phillips Chemical Company LLC | % | $ | |||||||||||||||||||||
WRB Refining LP* | |||||||||||||||||||||||
Gulf Coast Express Pipeline LLC** | |||||||||||||||||||||||
| Dakota Access, LLC | |||||||||||||||||||||||
JET Management Holding GmbH & Co. KG*** | |||||||||||||||||||||||
| Front Range Pipeline LLC | |||||||||||||||||||||||
| CF United LLC † | |||||||||||||||||||||||
| OnCue Holdings, LLC †† | X | ||||||||||||||||||||||
* On October 1, 2025, we acquired the remaining | |||||||||||||||||||||||
** Sold as of January 30, 2025. See further discussion in “Dispositions” section below. | |||||||||||||||||||||||
*** On December 1, 2025, we divested | |||||||||||||||||||||||
† On January 1, 2024, CF United LLC (CF United) ceased to be a VIE following the completion of the acquisition of another joint venture in which we had an ownership interest. In connection with this acquisition, the governing agreement for CF United was amended and restated. The amended and restated agreement included removal of a put option that required us to purchase our co-venturer’s interest based on a fixed multiple that was considered a variable interest. | |||||||||||||||||||||||
†† We fully guarantee various debt agreements of OnCue Holdings, LLC (OnCue), and our co-venturer does not participate in the guarantees. This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses. We have determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance. At December 31, 2025, our maximum exposure to loss was $ | |||||||||||||||||||||||
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The following table presents significant basis differences between the carrying value of our investments in unconsolidated affiliates and our share of their underlying equity at December 31:
| Millions of Dollars | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Excess (deficit) of Carrying Value over (under) Underlying Equity in Unconsolidated Affiliates | ||||||||||||||
WRB Refining LP* | $ | ( | ||||||||||||
Gulf Coast Express Pipeline LLC** | ||||||||||||||
| Front Range Pipeline LLC | ||||||||||||||
* On October 1, 2025, we acquired the remaining | ||||||||||||||
** Sold as of January 30, 2025. See further discussion in “Investment Dispositions” section below. | ||||||||||||||
The basis differences result from the carrying values of our investments being higher or lower than our share of the underlying equity of our unconsolidated affiliates. Carrying amounts in excess of the underlying equity of our unconsolidated affiliates are amortized and recognized as a decrease to equity earnings over the remaining life of the underlying long-lived assets of the affiliate. Carrying amounts that are less than the underlying equity of our unconsolidated affiliates are amortized and recognized as a benefit to equity earnings over the remaining life of the underlying long-lived assets of the affiliate.
Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)
Dakota Access is a 25 percent-owned joint venture that owns a pipeline system transporting crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois. ETCO is a 25 percent-owned joint venture that owns a connecting crude oil pipeline system that extends from Patoka to Nederland, Texas. These two pipeline systems collectively form the Bakken Pipeline system, which is operated by a co-venturer.
In 2020, the trial court presiding over litigation brought by the Standing Rock Sioux Tribe (the Tribe) ordered the U.S. Army Corps of Engineers (USACE) to prepare an Environmental Impact Statement (EIS) addressing environmental impacts from an easement allowing the passage of the Dakota Access Pipeline (DAPL) under Lake Oahe in North Dakota. Later in 2020, the trial court vacated the easement, but operations have been allowed to continue while the USACE proceeds with the EIS as ordered. The Tribe’s requests for a shutdown have been denied. Most recently, in March 2025, the trial court dismissed a second lawsuit filed by the Tribe, again challenging USACE’s allowance of pipeline operations while the EIS process proceeds. The Tribe’s lawsuit was premature, and the trial court held that it cannot be refiled until after a final EIS is issued.
In December 2025, the USACE published its final EIS, completing its analysis of alternatives. The final EIS evaluates five alternatives: two no-action alternatives (denial with restoration or abandonment) and three action alternatives, with one marked as USACE’s preferred alternative, that would grant the easement under varying conditions. The preferred alternative would grant the easement subject to the same conditions as the 2017 easement but would authorize an increased throughput volume of 1.1 million barrels per day (bpd), up from the previous 570,000 bpd under the original authorization. The remaining action alternatives would impose either additional operational conditions or require an alternate pipeline route, both of which may entail substantial implementation costs and could have a material impact on our financial statements.
We await a Record of Decision (ROD), which will provide a definitive statement of the selected alternative and any related conditions. The Standing Rock Sioux Tribe and affiliated parties may file a new lawsuit in Washington, D.C., challenging the ROD shortly after it is issued.
Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access. On April 1, 2024, Dakota Access’ wholly owned subsidiary repaid $1 billion aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25 % share of the repayment, or $250 million, with a capital contribution of $171 million in March 2024 and $79 million of distributions we elected not to receive from Dakota Access in the first quarter of 2024. At December 31, 2025, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $850 million.
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In addition, Phillips 66 Partners and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the notes offering. Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation. At December 31, 2025, our 25 % share of the maximum potential equity contributions under the CECU was approximately $215 million. If the pipeline is required to cease operations, it may have a material adverse effect on our results of operations and cash flows. Should operations cease and Dakota Access and ETCO not have sufficient funds to pay its expenses, we also could be required to support our 25 % share of the ongoing expenses, including scheduled interest payments on the notes of approximately $10 million annually, in addition to the potential obligations under the CECU at December 31, 2025.
At December 31, 2025 and 2024, the aggregate book value of our investments in Dakota Access and ETCO was $846 million and $883 million, respectively.
WRB Refining LP Impairment
In the third quarter of 2025, we identified impairment indicators related to our equity method investment in WRB, as a result of our definitive agreement to acquire the remaining 50 % equity interest in WRB for a purchase price that was below the carrying value of our then existing 50 % equity interest in WRB. We performed an impairment analysis based on a market approach and concluded the decline in fair value to be other than temporary. As a result, we recorded a $948 million before-tax impairment in our Refining segment to reduce the carrying value of our then existing 50 % equity interest in WRB to its fair value of $1.3 billion as of September 30, 2025. These impairment charges are included within the “Impairments” line item on our consolidated statement of income. As a result of the acquisition, effective October 1, 2025, we began consolidating the financial results of WRB. See Note 5—Business Combinations for additional information regarding our acquisition of WRB and Note 20—Fair Value Measurements for additional information on the determination of fair value used to record these impairments.
Dispositions
On December 1, 2025, we divested 65 % of our interest in Germany and Austria retail marketing business (Germany and Austria Marketing) for cash proceeds of approximately $1.7 billion (1.4 billion Euros) and retained a 35 % non-operating equity interest in the newly formed entity, JET Management Holding. We also settled the foreign currency forward contracts entered into in May 2025, in connection with the asset sale, in which we sold an aggregate of approximately 1.5 billion Euros in exchange for an aggregate of approximately $1.6 billion. We recognized a before-tax gain of $1.9 billion from these transactions, which is presented within the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2025, and is reported in our M&S segment. The gain comprised of the following components:
| Millions of Dollars | |||||
| Cash proceeds received | $ | ||||
Fair value of | |||||
| Reclassification from accumulated other comprehensive income | |||||
| Less: Carrying value of assets net of liabilities sold (including cash)* | ( | ||||
| Less: Goodwill allocated | ( | ||||
| Less: Foreign currency forward contract loss | ( | ||||
| Less: Liabilities incurred in conjunction with the sale | ( | ||||
| Gain on sale of Germany and Austria Marketing | $ | ||||
* Includes trade name intangible assets associated with Germany and Austria Marketing. | |||||
See Note 11—Goodwill and Intangibles for additional information on the allocation of goodwill and trade name intangible assets. See Note 20—Fair Value Measurements for additional information on the determination of fair value of the retained 35 % equity interest. See Note 26—Accumulated Other Comprehensive Loss for additional information on the reclassification from accumulated other comprehensive loss.
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As of December 1, 2025, following the divestitures, transactions with JET Management Holding will be classified and disclosed as related party transactions. See Note 29—Related Party Transactions for additional information.
On January 31, 2025, we sold our 49 % ownership interest in Coop Mineraloel AG (Coop) and settled the foreign currency forward contracts entered into in connection with the asset sale. We received cash proceeds of $1.2 billion, consisting of a sales price of $1.15 billion and a final dividend relating to financial year 2024 of $92 million from Coop that was paid on January 30, 2025. We recognized a before-tax gain of $1 billion associated with the sale, which is included within the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2025, and is reported in our M&S segment. The equity investment balance was $164 million as of December 31, 2024.
On January 30, 2025, DCP Midstream, LP sold its 25 % ownership interest in Gulf Coast Express Pipeline LLC for cash proceeds of $853 million. We recognized a before-tax gain of $68 million, which is included within the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2025, and is reported in our Midstream segment. The equity investment balance was $776 million as of December 31, 2024.
On December 10, 2024, we sold our equity interests in certain pipeline and terminaling assets in North Dakota for cash proceeds of approximately $143 million and recorded an immaterial before-tax loss on the sale.
On August 1, 2024, we sold our ownership interests in certain gathering and processing assets in Louisiana and Alabama for cash proceeds of $173 million and recognized a before-tax gain of $18 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024, and is reported in the Midstream segment.
On June 14, 2024, we sold our 25 % ownership interest in Rockies Express Pipeline LLC for cash proceeds of $685 million and recognized a before-tax gain of $238 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024, and is reported in the Midstream segment.
Equity Affiliate Distributions
Total cash distributions received from affiliates were $971 million, $1,525 million, and $1,396 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, at December 31, 2025, retained earnings included approximately $3.7 billion related to the undistributed earnings of affiliated companies.
Summarized Equity Affiliate Financial Information
Summarized 100% financial information for all affiliated companies accounted for under the equity method, on a combined basis, as of and for the years ended December 31 was:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenues | $ | ||||||||||||||||
| Income before income taxes | |||||||||||||||||
| Net income | |||||||||||||||||
| Current assets | |||||||||||||||||
| Noncurrent assets | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Noncurrent liabilities | |||||||||||||||||
| Noncontrolling interests | |||||||||||||||||
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Note 10—Properties, Plants and Equipment
Our investment in PP&E is recorded at cost. Investments in refining and processing facilities are generally depreciated on a straight-line basis over a 25-year life, pipeline assets over a 45 -year life, terminal assets over a 35 -year life, and gathering systems over a 35-year life. The company’s investment in PP&E, with the associated accumulated depreciation and amortization (Accum. D&A), at December 31 was:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Gross PP&E | Accum. D&A | Net PP&E | Gross PP&E | Accum. D&A | Net PP&E | ||||||||||||||||||||||||||||||
| Midstream | $ | ||||||||||||||||||||||||||||||||||
| Chemicals | |||||||||||||||||||||||||||||||||||
| Refining | |||||||||||||||||||||||||||||||||||
| Marketing and Specialties | |||||||||||||||||||||||||||||||||||
| Renewable Fuels | |||||||||||||||||||||||||||||||||||
| Corporate and Other | |||||||||||||||||||||||||||||||||||
| $ | |||||||||||||||||||||||||||||||||||
See Note 4—Restructuring, for information regarding the cessation of fuel production and idling of the Los Angeles Refinery. See Note 5—Business Combinations and Note 20—Fair Value Measurements for additional information regarding our acquisitions in the Midstream, Refining and Marketing and Specialties segments. See Note 9—Investments, Loans and Long-Term Receivables for additional information regarding the partial sale of Germany and Austria Marketing in the M&S segment. See Note 12—Impairments, for information regarding PP&E impairments the Refining and Midstream segments.
On August 30, 2024, we sold certain Midstream gathering and processing assets in Texas for cash proceeds of $41 million and recognized a before-tax loss of $9 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024.
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Note 11—Goodwill and Intangibles
The carrying amount of goodwill by segment at December 31 was:
| Millions of Dollars | |||||||||||||||||
| Midstream | Marketing and Specialties | Total | |||||||||||||||
| Balance at December 31, 2023 | $ | ||||||||||||||||
| Goodwill assigned to acquisitions | |||||||||||||||||
| Balance at December 31, 2024 | |||||||||||||||||
| Adjustments | ( | ( | |||||||||||||||
| Goodwill assigned to divestiture | ( | ( | |||||||||||||||
| Balance at December 31, 2025 | $ | ||||||||||||||||
On December 1, 2025, we divested 65 % of our interest in Germany and Austria Marketing, and derecognized $141 million goodwill in connection with the disposition. The $141 million goodwill allocated to Germany and Austria Marketing is based on the relative fair value of Germany and Austria Marketing compared to the fair value of the M&S reporting unit. See Note 9—Investments, Loans and Long-Term Receivables for additional information on the disposition.
On July 1, 2024, we acquired Dos Picos in our Midstream segment and recognized goodwill of $21 million associated with this acquisition. Refer to Note 5—Business Combinations for additional information.
Intangible Assets
Intangible Assets with Indefinite Useful Lives
The gross carrying value of indefinite-lived intangible assets at December 31 consisted of the following:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Trade names and trademarks | $ | ||||||||||
| Refinery air and operating permits | |||||||||||
| $ | |||||||||||
During the year ended December 31, 2025, our trade names and trademarks intangible balances decreased $93 million, primarily due to the derecognition of a trade name in connection with the partial sale of Germany and Austria Marketing. See Note 9—Investments, Loans and Long-Term Receivables for additional information on the disposition.
Intangible Assets with Finite Useful Lives
The net book value of our amortized intangible assets was $450 million at December 31, 2025, and $549 million at December 31, 2024. These balances include accumulated amortization of $462 million and $408 million, at December 31, 2025 and 2024, respectively. The amortized intangible assets are primarily related to customer relationships.
On July 1, 2024, we acquired Dos Picos in our Midstream segment and recorded $256 million in amortizable intangible assets, which have a weighted-average amortization period of 20 years. Associated with the 2024 acquisition and final valuation of a marketing business on the U.S. West Coast, in our M&S segment, we recorded $20 million in amortizable intangible assets. See Note 5—Business Combinations for additional information.
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For the years ended December 31, 2025, 2024 and 2023, amortization expense was $138 million, $53 million and $33 million, respectively. The increases in amortization expense for the years ended December 31, 2025 and 2024 are primarily due to the accelerated amortization resulting from the cessation of fuel production and idling of our Los Angeles Refinery. See Note 4—Restructuring for additional information. Expected amortization expenses beyond 2026 are less than $50 million per year.
Note 12—Impairments
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Midstream | $ | ||||||||||||||||
| Refining | |||||||||||||||||
| Marketing and Specialties | |||||||||||||||||
| Corporate and Other | |||||||||||||||||
| Total impairments | $ | ||||||||||||||||
For the year ended December 31, 2025, we recorded before-tax impairments totaling $1.1 billion, which included $955 million recorded in our Refining segment and $79 million recorded in our Midstream segment. Refining segment impairments included a $948 million before-tax impairment related to our equity method investment in WRB. See Note 9—Investments, Loans and Long-Term Receivables for additional information. The Midstream segment included a $79 million before-tax impairment related to an equity investment in an NGL pipeline in Texas.
For the year ended December 31, 2024, we recorded before-tax impairments totaling $456 million, which included $346 million recorded in our Midstream segment and $106 million recorded in our Refining segment. Midstream segment impairments included $224 million related to certain gathering and processing assets in Texas, $35 million related to an equity investment in a crude pipeline in Oklahoma, and $28 million related to certain crude gathering assets in Texas. Before-tax impairments for the year ended December 31, 2024 also included $163 million related to certain crude oil processing and logistics assets in California, of which $104 million was reported in our Refining segment and $59 million was reported in our Midstream segment.
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Note 13—Asset Retirement Obligations and Accrued Environmental Costs
Asset retirement obligations and accrued environmental costs at December 31 were:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Asset retirement obligations | $ | ||||||||||
| Total asset retirement obligations and accrued environmental costs | |||||||||||
| Asset retirement obligations and accrued environmental costs due within one year* | ( | ( | |||||||||
| Long-term asset retirement obligations and accrued environmental costs | $ | ||||||||||
* Classified as a current liability, which is presented within the “Other accruals” line item on our consolidated balance sheet.
Asset Retirement Obligations
We have asset retirement obligations that we are required to perform under law or contract once an asset is permanently taken out of service. Our recognized asset retirement obligations primarily involve asbestos abatement at our current refineries, or at sites we own that were previously utilized as refineries; decommissioning, removal or dismantlement of certain assets at refineries that have ceased or will cease operations; and decommissioning, removal or dismantlement of certain midstream pipelines and processing facilities. Asset retirement obligations related to dismantlement or removal of assets at certain leased international marketing sites were derecognized as of December 31, 2025, following the partial sale of Germany and Austria Marketing. Most of our asset retirement obligations are not expected to be paid until many years in the future and are expected to be funded from general company resources at the time of removal.
Our overall asset retirement obligations changed as follows during the years ended December 31:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at January 1 | $ | ||||||||||
| Accretion of discount | |||||||||||
| New obligations | |||||||||||
| Changes in estimates of existing obligations | |||||||||||
| Spending on existing obligations | ( | ( | |||||||||
| Asset dispositions | ( | ( | |||||||||
| Foreign currency translation | ( | ||||||||||
| Balance at December 31 | $ | ||||||||||
During the year ended December 31, 2025, our asset retirement obligations balance decreased $50 million. This decrease was primarily due to the derecognition of obligations as a result of the partial sale of Germany and Austria Marketing, partially offset by increased estimates in existing obligations of $81 million, primarily due to the cessation of fuel production and idling of the Los Angeles Refinery, and new obligations of $42 million, primarily from the WRB acquisition. See Note 4—Restructuring for additional information on the cessation of fuel production and idling of the Los Angeles Refinery; See Note 5—Business Combinations for additional information on the WRB acquisition; See Note 9—Investments, Loans and Long-Term Receivables for additional information regarding the partial sale of Germany and Austria Marketing.
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Accrued Environmental Costs
Of our total accrued environmental costs at December 31, 2025, $373 million was primarily related to cleanup at current domestic refineries, or at sites we own that were previously utilized as domestic refineries, and underground storage tanks at U.S. service stations; $96 million was associated with non-operated sites; and $37 million was related to sites at which we have been named a potentially responsible party under federal or state laws. A large portion of our expected environmental expenditures have been discounted as these obligations were acquired in various business combinations. Expected expenditures for acquired environmental obligations were discounted using a weighted-average discount rate of approximately 5 %. At December 31, 2025, the accrued balance for acquired environmental liabilities was $304 million. The expected future undiscounted payments related to the portion of the accrued environmental costs that have been discounted are: $35 million in 2026, $24 million in 2027, $28 million in 2028, $34 million in 2029, $24 million in 2030, and $230 million in the aggregate for all years after 2030.
Note 14—Earnings Per Share
The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, adjusted for noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||||
Amounts Attributed to Phillips 66 Common Stockholders (millions): | ||||||||||||||||||||||||||
| Net Income Attributable to Phillips 66 | $ | |||||||||||||||||||||||||
| Income allocated to participating securities | ( | ( | ( | ( | ( | |||||||||||||||||||||
| Net income available to common stockholders | $ | |||||||||||||||||||||||||
Weighted-average common shares outstanding (thousands): | ||||||||||||||||||||||||||
| Effect of share-based compensation | ||||||||||||||||||||||||||
Weighted-average common shares outstanding—EPS | ||||||||||||||||||||||||||
Earnings Per Share of Common Stock (dollars) | $ | |||||||||||||||||||||||||
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Note 15—Debt
Short-term and long-term debt at December 31 was:
| Millions of Dollars | |||||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Phillips 66 | Phillips 66 Company | Phillips 66 Partners | DCP LP | Total | |||||||||||||
Commercial paper due January 2026 at | |||||||||||||||||
Receivables Securitization Facility due September 2026 at | |||||||||||||||||
| Debt at face value | |||||||||||||||||
| Finance leases | |||||||||||||||||
| Software obligations | |||||||||||||||||
| Net unamortized discounts, debt issuance costs and acquisition fair value adjustments | ( | ||||||||||||||||
| Total debt | |||||||||||||||||
| Short-term debt | ( | ||||||||||||||||
| Long-term debt | $ | ||||||||||||||||
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| Millions of Dollars | |||||||||||||||||
| December 31, 2024 | |||||||||||||||||
| Phillips 66 | Phillips 66 Company | Phillips 66 Partners | DCP LP | Total | |||||||||||||
Commercial paper due January 2025 at | |||||||||||||||||
Uncommitted Facility due July 2025 at | |||||||||||||||||
Receivables Securitization Facility due September 2025 at | |||||||||||||||||
Floating Rate Term Loan due June 2026 at | |||||||||||||||||
| Other | |||||||||||||||||
| Debt at face value | |||||||||||||||||
| Finance leases | |||||||||||||||||
| Software obligations | |||||||||||||||||
| Net unamortized discounts, debt issuance costs and acquisition fair value adjustments | ( | ||||||||||||||||
| Total debt | |||||||||||||||||
| Short-term debt | ( | ||||||||||||||||
| Long-term debt | $ | ||||||||||||||||
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Maturities of borrowings outstanding at December 31, 2025, inclusive of net unamortized discounts and debt issuance costs, for each of the years from 2026 through 2030 are $1,038 million, $1,282 million, $1,319 million, $1,217 million and $1,192 million, respectively.
Senior Notes and Term Loan Issuances and Repayments
Issuances
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. The senior unsecured notes issuance consisted of:
•$600 million aggregate principal amount of 5.250 % Senior Notes due 2031 (Additional 2031 Notes).
•$600 million aggregate principal amount of 4.950 % Senior Notes due 2035 (2035 Notes).
•$600 million aggregate principal amount of 5.500 % Senior Notes due 2055 (2055 Notes).
Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on December 15, 2024. Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15 of each year and commenced on March 15, 2025.
On February 28, 2024, Phillips 66 Company issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:
•$600 million aggregate principal amount of 5.250 % Senior Notes due 2031 (2031 Notes).
•$400 million aggregate principal amount of 5.300 % Senior Notes due 2033 (Additional 2033 Notes).
•$500 million aggregate principal amount of 5.650 % Senior Notes due 2054 (2054 Notes).
Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024. Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on June 30, 2024.
On March 29, 2023, Phillips 66 Company issued $1.25 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:
•$750 million aggregate principal amount of 4.950 % Senior Notes due December 2027.
•$500 million aggregate principal amount of 5.300 % Senior Notes due June 2033.
Repayments
On December 31, 2025, Phillips 66 early redeemed $400 million of its 1.300 % Senior Notes due February 2026. After the redemption, an aggregate principal amount of $100 million remained outstanding.
On December 4, 2025, Phillips 66 Company repaid the remaining $550 million outstanding under its delayed draw term loan agreement (the Term Loan Agreement), which had a maturity date of June 2026, and terminated this agreement.
On June 27, 2025, DCP LP early redeemed the outstanding $525 million of its 5.375 % Senior Notes due July 2025, with an aggregate principal amount of $825 million.
On February 18, 2025, upon maturity, Phillips 66 Partners repaid its 3.605 % Senior Notes due February 2025, with an aggregate principal amount of $59 million.
On December 16, 2024, upon maturity, Phillips 66 Company and Phillips 66 Partners repaid the 2.450 % Senior Notes due December 2024 with an aggregate principal amount of $300 million.
On March 29, 2024, DCP LP early redeemed $300 million of its 5.375 % Senior Notes due July 2025, at par with an aggregate principal amount of $825 million.
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On March 4, 2024, Phillips 66 Company repaid $700 million of the $1.25 billion borrowed under its delayed draw term loan that matures in June 2026.
On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900 % senior notes due February 2024 with an aggregate principal amount of $800 million.
On May 19, 2023, DCP LP redeemed its 5.850 % junior subordinated notes due May 2043 with an aggregate principal amount outstanding of $550 million. On the date of redemption, our carrying value of DCP LP’s junior subordinated notes was $497 million, which resulted in a $53 million before-tax loss. DCP LP’s junior subordinated notes were adjusted to fair value on August 17, 2022, in connection with the consolidation of DCP LP. See Note 20—Fair Value Measurements for additional information regarding the fair value of DCP LP’s junior subordinated notes.
On March 15, 2023, DCP LP repaid its 3.875 % senior unsecured notes due March 2023 with an aggregate principal amount of $500 million.
Discharge of Senior Notes
On September 20, 2024, we extinguished (i) the remaining $441 million outstanding principal amount of Phillips 66 Company’s 3.605 % senior notes due February 2025 (2025 P66 Co Notes), and (ii) the remaining $650 million outstanding principal amount of Phillips 66’s 3.850 % senior notes due April 2025 (the 2025 PSX Notes, and together with the 2025 P66 Co Notes, the Discharged Notes), whereby we irrevocably transferred a total of $1.1 billion in government obligations to the trustee of the 2025 P66 Co Notes and the 2025 PSX Notes. The cash paid to purchase the government obligations is included within investing cash flows on our consolidated statement of cash flows. These government obligations 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. On September 20, 2024, Phillips 66 and Phillips 66 Company ceased to be the primary obligors under the Discharged Notes. The transfer of the government obligations to the trustee was accounted for as a transfer of financial assets. The Discharged Notes and the government obligations were derecognized from our balance sheet at December 31, 2024. For the year ended December 31, 2024, we recognized an immaterial gain on the extinguishment of this debt.
Term Loan Agreement
On March 27, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, entered into a $1.5 billion delayed draw term loan agreement guaranteed by Phillips 66. The Term Loan Agreement provides for a single borrowing during a 90-day period commencing on the closing date, which borrowing was contingent upon the completion of the DCP LP Merger. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65 % as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement bear interest at either: (a) the adjusted term Secured Overnight Financing Rate (SOFR) in effect from time to time plus the applicable margin; or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement. At December 31, 2025, no borrowings were outstanding under the Term Loan Agreement, as the remaining balance was prepaid in full on December 4, 2025. At December 31, 2024, $550 million was outstanding under the Term Loan Agreement, which had a maturity date of June 2026. This agreement was terminated as of December 31, 2025.
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
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Junior Subordinated Notes Issuances
On September 18, 2025, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $2 billion aggregate principal amount of junior subordinated notes that are fully and unconditionally guaranteed by Phillips 66. The junior subordinated notes issuance consisted of:
•$1 billion aggregate principal amount of 5.875 % Series A Junior Subordinated Notes due 2056 (Series A 2056 Notes).
•$1 billion aggregate principal amount of 6.200 % Series B Junior Subordinated Notes due 2056 (Series B 2056 Notes).
Interest on the Series A 2056 Notes and Series B 2056 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2026. The Series A 2056 Notes will bear interest at 5.875 % per year until March 15, 2031. The interest rate will reset every five years beginning on March 15, 2031, to equal the then-current five-year U.S. Treasury rate plus a spread of 2.283 %, provided that the interest rate will not reset below 5.875 %. The Series B 2056 Notes will bear interest at 6.200 % per year until March 15, 2036. The interest rate will reset every five years beginning on March 15, 2036, to equal the then-current five-year U.S. Treasury rate plus a spread of 2.166 %, provided that the interest rate will not reset below 6.200 %. We may defer interest payments on the Series A 2056 Notes and Series B 2056 Notes on one 10
Accounts Receivable Securitization
On September 30, 2024, Phillips 66 Company entered into a 364 -day, $500 million accounts receivable securitization facility (the Receivables Securitization Facility). Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its 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. On April 1, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $500 million to $1 billion. On September 29, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $1 billion to $1.25 billion and extend the term of the facility through September 28, 2026. 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. 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.
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. P66 Receivables is a separate legal entity with its own separate creditors, who will be entitled, upon its liquidation, to be satisfied out of P66 Receivables’ assets prior to assets or value in P66 Receivables becoming available to P66 Receivables’ equity holders. The assets of P66 Receivables, including any funds of P66 Receivables that may be commingled with funds of any of its affiliates for purposes of cash management and related efficiencies, are not available to pay creditors of Phillips 66 Company, Phillips 66 or any affiliate thereof. Collections on 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 case, subject to the terms set forth in the Receivables Securitization Facility. The amount available for borrowing or sale
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of accounts receivable may be limited by the availability of eligible accounts receivable and other customary factors and conditions, as well as the covenants set forth in the Receivables Securitization Facility.
Sales of accounts receivable under the Receivables Securitization Facility meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet. P66 Receivables guarantees payment, in full, for accounts receivable sold to the purchasers. Cash receipts from the sale of accounts receivable under the Receivables Securitization Facility, received at the time of sale, are classified as cash flows from operating activities. For the year-ended December 31, 2025, we sold $759 million in accounts receivable in exchange for cash proceeds of $290 million, and a $469 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. 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.
Borrowings under the Receivables Securitization Facility are recognized as short-term debt on the consolidated balance sheet. Borrowings are secured by the accounts receivable, held by P66 Receivables, which remain reported as accounts receivable on the consolidated balance sheet. At December 31, 2025 and 2024, we had outstanding borrowings of $200 million and $375 million, respectively. These borrowings were secured by accounts receivable held by P66 Receivables of $4.4 billion and $4.6 billion for 2025 and 2024, respectively, which are included within the “Accounts and notes receivable” line item on our consolidated balance sheet.
At December 31, 2025, we had utilized $367 million of the $1.25 billion capacity of the Receivables Securitization Facility from $167 million of sold accounts receivable not yet remitted to the Administrative Agent and $200 million of outstanding borrowings. At December 31, 2024, we had utilized the full $500 million capacity of our Receivables Securitization Facility from $125 million of sold accounts receivable not yet remitted to the Administrative Agent and $375 million of outstanding borrowings.
Credit Facilities and Commercial Paper
Phillips 66 and Phillips 66 Company
On January 13, 2025, we entered into a $200 million uncommitted credit facility (the 2025 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2025 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2025 Uncommitted Facility has no six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At December 31, 2025, no borrowings were outstanding under the 2025 Uncommitted Facility.
On June 25, 2024, we entered into a $400 million uncommitted credit facility (the 2024 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2024 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2024 Uncommitted Facility has no six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At December 31, 2025, no borrowings were outstanding, while at December 31, 2024, the entire $400 million had been drawn under the 2024 Uncommitted Facility.
On February 28, 2024, we entered into a new $5 billion revolving credit agreement (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of February 28, 2029. The Facility replaced our previous $5 billion revolving credit facility dated as of June 23, 2022, with Phillips 66 Company as the borrower and Phillips 66 as the guarantor, and the previous revolving credit facility was terminated. The Facility contains customary covenants similar to the previous revolving credit facility, including a maximum consolidated net
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debt-to-capitalization ratio of 65 % as of the last day of each fiscal quarter. The Facility has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Facility, in whole or in part, without premium or penalty. We have the option to increase the overall capacity to $6 billion, subject to certain conditions. We also have the option to extend the scheduled maturity of the Facility for up to two additional -year terms, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment. Outstanding borrowings under the Facility bear interest at either: (a) the adjusted term SOFR (as described in the Facility) in effect from time to time plus the applicable margin; or (b) the reference rate (as described in the Facility) plus the applicable margin. The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time. At December 31, 2025 and 2024, no
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.
DCP Midstream Class A Segment
On March 15, 2024, DCP LP terminated its $1.4 billion credit facility and its accounts receivable securitization facility that previously provided for up to $350 million of borrowing capacity. In conjunction with the termination of these facilities, DCP LP repaid $25 million in borrowings outstanding under its $1.4 billion credit facility and $350 million of borrowings outstanding under its accounts receivable securitization facility during the three months ended March 31, 2024.
Total Committed Capacity Available
At December 31, 2025, and 2024, we had $5.7 billion and $4.6 billion, respectively, of total committed capacity available under the credit facilities described above.
Note 16—Accounts Receivable Factoring
In addition to the Receivables Securitization Facility, discussed in Note 15—Debt, the Company entered into other facilities with various financial institutions during the fourth quarter of 2025 that enable the Company to sell certain eligible accounts receivable to these financial institutions on a non-recourse basis. Sales of accounts receivable under these facilities meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet. Cash receipts from the sale of accounts receivable, received at the time of sale, are classified as cash flows from operating activities. The Company retains the servicing on all accounts receivable sold under these facilities. For the year ended December 31, 2025, we sold $195 million of accounts receivable under these facilities for cash proceeds. We recognized immaterial charges associated with these transfers, which are included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income for the year ended December 31, 2025.
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Note 17—Guarantees
At December 31, 2025, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantees and expect future performance to be either immaterial or have only a remote chance of occurrence.
Lease Residual Value Guarantees
Under the operating lease agreement for our headquarters facility in Houston, Texas, we 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. In September 2025, we amended and extended the lease term to September 2030. Under the new operating lease agreement, we have a residual value guarantee with a maximum potential future exposure of $404 million at December 31, 2025.
We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $175 million. These leases have remaining terms of to ten years .
Guarantees of Joint Venture Obligations
In March 2019, Phillips 66 Partners and its co-venturers in Dakota Access provided a CECU in conjunction with a senior unsecured notes offering. See Note 9—Investments, Loans and Long-Term Receivables for additional information regarding Dakota Access and the CECU.
At December 31, 2025, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to four years . The maximum potential future exposures under these guarantees were approximately $54 million. Payment would be required if a joint venture defaults on its obligations.
Indemnifications
Over the years, we have entered into various agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to indemnifications. Agreements associated with these sales include indemnifications for taxes, litigation, environmental liabilities, permits and licenses, employee claims, and real estate tenant defaults. The provisions of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, which generally have indefinite terms and potentially unlimited exposure. At December 31, 2025 and 2024, the carrying amount of recorded indemnifications was $53 million and $125 million, respectively.
We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information to support the reversal. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. At December 31, 2025 and 2024, environmental accruals for known contamination of $50 million and $100 million, respectively, were included in the carrying amount of the recorded indemnifications noted above. These environmental accruals were primarily included in the “Asset retirement obligations and accrued environmental costs” line item on our consolidated balance sheet. For additional information about environmental liabilities, see Note 13—Asset Retirement Obligations and Accrued Environmental Costs and Note 18—Contingencies and Commitments.
Additionally, P66 Receivables has guaranteed all borrowings and receivables sold under our Receivables Securitization Facility. 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. See Note 15—Debt for information regarding the guarantee under our Receivables Securitization Facility.
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Indemnification and Release Agreement
In 2012, in connection with our separation from ConocoPhillips, we entered into an Indemnification and Release Agreement. This agreement governs the treatment between ConocoPhillips and us of matters relating to indemnification, insurance, litigation responsibility and management, and litigation document sharing and cooperation arising in connection with the separation. Generally, the agreement provides for cross indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of ConocoPhillips’ business with ConocoPhillips. The agreement also establishes procedures for handling claims subject to indemnification and related matters.
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Note 18—Contingencies and Commitments
A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain. See Note 25—Income Taxes for additional information about income-tax-related contingencies.
Other than with respect to the legal matters described herein, based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.
Environmental
We are subject to international, federal, state and local environmental laws and regulations. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using information available at the time. We measure estimates and base contingent liabilities on currently available facts, existing technology and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring contingent environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the Environmental Protection Agency (EPA) or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.
Although liability for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies alleged to have liability at a particular site. Due to such joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites for which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit, although some of the indemnifications are subject to dollar and time limits.
We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except those pertaining to sites acquired in a business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings. See Note 13—Asset Retirement Obligations and Accrued Environmental Costs, for a summary of our accrued environmental liabilities.
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Legal Proceedings
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.
Propel Fuels Litigation
In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc. (Propel Fuels), a California company that distributes E85 and other alternative fuels through fueling kiosks. Ultimately, the parties were not able to reach an agreement, and negotiations were terminated in August 2018. On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. 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. 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. 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. 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. 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. 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. As a result of the August 2025 final judgment and the October 2024 jury verdict, we recorded $262 million and $604.9 million of expense for the years ended December 31, 2025 and 2024, respectively, which are included within the “Selling, general and administrative expenses” line on our consolidated statement of income and reported in the M&S segment. Therefore, our recorded accruals totaling $867 million and $604.9 million as of December 31, 2025 and 2024, respectively, are reflected as “Other liabilities and deferred credits” on our consolidated balance sheet. However, it is reasonably possible that the estimate of the loss could change based on the progression of the case, including the appeals process. If information were to become available that would allow us to reasonably estimate a range of potential exposure in an amount higher or lower than the amount already accrued, we would adjust our accrued liabilities accordingly. While Phillips 66 Company believes the jury verdict is not legally or factually supported, 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.
Other Contingencies
We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized.
At December 31, 2025, we had performance obligations secured by letters of credit and bank guarantees of $326 million related to various purchase and other commitments incident to the ordinary conduct of business.
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Long-Term Throughput Agreements and Take-or-Pay Agreements
We have certain throughput agreements and take-or-pay agreements in support of third-party financing arrangements. The agreements typically provide for crude oil transportation to be used in the ordinary course of our business. At December 31, 2025, the estimated aggregate future payments under these agreements were on average $315 54 million in aggregate for all years after 2030. For the years ended December 31, 2025, 2024 and 2023, total payments under these agreements were $316 million, $319 million and $319 million, respectively.
Note 19—Derivatives and Financial Instruments
Derivative Instruments
We use financial and commodity-based derivative contracts to manage exposures to fluctuations in commodity prices, interest rates and foreign currency exchange rates, or to capture market opportunities. Because we do not apply hedge accounting for commodity derivative contracts, all realized and unrealized gains and losses from commodity derivative contracts are recognized in our consolidated statement of income. Gains and losses from derivative contracts held for trading not directly related to our physical business are reported net within the “Other income” line item on our consolidated statement of income. Realized and unrealized gains and losses on foreign currency derivatives entered into in connection with our investment dispositions are reported within the “Net gain on dispositions” line item on our consolidated statement of income. Cash flows from all our commodity derivative activity for the periods presented appear within the “Cash Flows from Operating Activities” section on our consolidated statement of cash flows.
Purchase and sales contracts with firm minimum notional volumes for commodities that are readily convertible to cash are recorded on our consolidated balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception, whereby the contracts are recorded on an accrual basis. We generally apply the normal purchases and normal sales exception to eligible crude oil, refined petroleum product, NGL, natural gas, renewable feedstocks, and power commodity contracts to purchase or sell quantities we expect to use or sell in the normal course of business. All other derivative instruments are recorded at fair value on our consolidated balance sheet. For further information on the fair value of derivatives, see Note 20—Fair Value Measurements.
Commodity Derivative Contracts
We sell into or receive supply from the worldwide crude oil, refined petroleum product, NGL, natural gas, renewable feedstocks and renewable fuels, and electric power markets, exposing our revenues, purchases, cost of operating activities and cash flows to fluctuations in the prices for these commodities. Generally, our policy is to remain exposed to the market prices of commodities; however, we use futures, forwards, swaps and options in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited amount of trading not directly related to our physical business, all of which may reduce our exposure to fluctuations in market prices. We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades.
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The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities. The balances in the following table are presented on a gross basis, before the effects of counterparty and collateral netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our consolidated balance sheet when the legal right of offset exists.
| Millions of Dollars | |||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Commodity Derivatives | Effect of Collateral Netting | Net Carrying Value Presented on the Balance Sheet | Commodity Derivatives | Effect of Collateral Netting | Net Carrying Value Presented on the Balance Sheet | ||||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Prepaid expenses and other current assets | $ | ( | ( | ||||||||||||||||||||||||||
| Other assets | ( | ||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Other accruals | ( | ( | ( | ( | |||||||||||||||||||||||||
| Other liabilities and deferred credits | ( | ||||||||||||||||||||||||||||
| Total | $ | ( | ( | ||||||||||||||||||||||||||
At December 31, 2025, and 2024, there was no material cash collateral received or paid that was not offset on our consolidated balance sheet.
The realized and unrealized gains (losses) incurred from commodity derivatives, and the line items where they appear on our consolidated statement of income, were:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Sales and other operating revenues | $ | ||||||||||||||||
| Other income | |||||||||||||||||
| Purchased crude oil and products | ( | ( | ( | ||||||||||||||
| Net gain (loss) from commodity derivative activity | $ | ( | |||||||||||||||
The following table summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying operations. The underlying exposures may be from nonderivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward purchase and sales contracts. The percentage of our derivative contract volumes expiring within the next 12 months was more than 90
| Open Position Long / (Short) | |||||||||||
| 2025 | 2024 | ||||||||||
| Commodity | |||||||||||
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels) | ( | ( | |||||||||
Natural gas (billions of cubic feet) | ( | ( | |||||||||
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Credit Risk from Derivative and Financial Instruments
Financial instruments potentially exposed to concentrations of credit risk consist primarily of trade receivables and derivative contracts.
Our trade receivables result primarily from the sale of products from, or related to, our refinery operations and reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have payment terms of 30 days or less. We continually monitor this exposure and the creditworthiness of the counterparties and recognize bad debt expense based on a probability assessment of credit loss. Generally, we do not require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments or master netting arrangements to mitigate credit risk with counterparties that both buy from and sell to us, as these agreements permit the amounts owed by us to others to be offset against amounts owed to us.
The credit risk from our derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction. Individual counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps and option contracts that have a negligible credit risk because these trades are cleared with an exchange clearinghouse and subject to mandatory margin requirements, typically on a daily basis, until settled.
Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable threshold amounts that are contingent on our credit ratings. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if our credit ratings fall below investment grade. Cash is the primary collateral in all contracts; however, many contracts also permit us to post letters of credit as collateral.
The aggregate fair values of all derivative instruments with such credit-risk-related contingent features that were in a liability position were immaterial at December 31, 2025 and 2024.
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Note 20—Fair Value Measurements
Recurring Fair Value Measurements
We carry certain assets and liabilities at fair value, which we measure at the reporting date using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:
•Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.
•Level 2: Fair value measured either with: (1) adjusted quoted prices from an active market for similar assets or liabilities; or (2) other valuation inputs that are directly or indirectly observable.
•Level 3: Fair value measured with unobservable inputs that are significant to the measurement.
We classify the fair value of an asset or liability based on the significance of its observable or unobservable inputs to the measurement. However, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable.
We used the following methods and assumptions to estimate the fair value of financial instruments:
•Cash and cash equivalents—The carrying amount reported on our consolidated balance sheet approximates fair value.
•Accounts and notes receivable—The carrying amount reported on our consolidated balance sheet approximates fair value.
•Derivative instruments—The fair value of our exchange-traded contracts is based on quoted market prices obtained from the New York Mercantile Exchange, the Intercontinental Exchange or other exchanges, and is reported as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity, or are valued using either adjusted exchange-provided prices or nonexchange quotes, we classify those contracts as Level 2 or Level 3 based on the degree to which inputs are observable.
Physical commodity forward purchase and sales contracts and over-the-counter (OTC) financial swaps are generally valued using forward quotes provided by brokers and price index developers, such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. When forward market prices are not available, we estimate fair value using the forward price of a similar commodity, adjusted for the difference in quality or location. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, physical commodity purchase and sales contracts and OTC swaps are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Physical and OTC commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or Level 3. We use a midmarket pricing convention (the midpoint between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.
When applicable, we determine the fair value of interest rate swaps based on observable market valuations for interest rate swaps that have notional amounts, terms and pay and reset frequencies similar to ours.
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When applicable, we determine the fair value of foreign currency derivatives based on observable market data. Management’s best estimate of transaction dates may be used if relevant to the instrument valuation. The degree to which these inputs are observable in the forward markets determines whether the instruments are classified as Level 2 or Level 3.
•Rabbi trust assets—These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.
•Investment in NOVONIX—At December 31, 2025, our investment in NOVONIX Limited (NOVONIX) was 14.29 %, which is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.
•Other investments—Includes other marketable securities with observable market prices.
•Debt—The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated primarily based on observable market prices.
The following tables display the fair value hierarchy for our financial assets and liabilities either accounted for or disclosed at fair value on a recurring basis. These values are determined by treating each contract as the fundamental unit of account; therefore, derivative assets and liabilities with the same counterparty are shown on a gross basis in the hierarchy sections of these tables, before the effects of counterparty and collateral netting. The following tables also reflect the effect of netting derivative assets and liabilities with the same counterparty for which we have the legal right of offset and collateral netting.
The carrying values and fair values by hierarchy of our financial assets and liabilities, either carried or disclosed at fair value, including any effects of counterparty and collateral netting, were:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | Total Fair Value of Gross Assets & Liabilities | Effect of Counterparty Netting | Effect of Collateral Netting | Difference in Carrying Value and Fair Value | Net Carrying Value Presented on the Balance Sheet | ||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||
| Commodity Derivative Assets | |||||||||||||||||||||||||||||||||||
| Exchange-cleared instruments | $ | ( | |||||||||||||||||||||||||||||||||
| Physical forward contracts | ( | ||||||||||||||||||||||||||||||||||
| Rabbi trust assets | N/A | N/A | |||||||||||||||||||||||||||||||||
| Investment in NOVONIX | N/A | N/A | |||||||||||||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||||||||||||||
| Commodity Derivative Liabilities | |||||||||||||||||||||||||||||||||||
| Exchange-cleared instruments | $ | ( | ( | ||||||||||||||||||||||||||||||||
| Physical forward contracts | ( | ||||||||||||||||||||||||||||||||||
| Floating-rate debt | N/A | N/A | |||||||||||||||||||||||||||||||||
| Fixed-rate debt, excluding finance leases and software obligations | N/A | N/A | |||||||||||||||||||||||||||||||||
| $ | ( | ( | |||||||||||||||||||||||||||||||||
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| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | Total Fair Value of Gross Assets & Liabilities | Effect of Counterparty Netting | Effect of Collateral Netting | Difference in Carrying Value and Fair Value | Net Carrying Value Presented on the Balance Sheet | ||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||
| Commodity Derivative Assets | |||||||||||||||||||||||||||||||||||
| Exchange-cleared instruments | $ | ( | |||||||||||||||||||||||||||||||||
| OTC instruments | |||||||||||||||||||||||||||||||||||
| Physical forward contracts | ( | ||||||||||||||||||||||||||||||||||
| Rabbi trust assets | N/A | N/A | |||||||||||||||||||||||||||||||||
| Investment in NOVONIX | N/A | N/A | |||||||||||||||||||||||||||||||||
| Foreign currency derivative* | N/A | N/A | |||||||||||||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||||||||||||||
| Commodity Derivative Liabilities | |||||||||||||||||||||||||||||||||||
| Exchange-cleared instruments | $ | ( | ( | ||||||||||||||||||||||||||||||||
| Physical forward contracts | ( | ||||||||||||||||||||||||||||||||||
| Floating-rate debt | N/A | N/A | |||||||||||||||||||||||||||||||||
| Fixed-rate debt, excluding finance leases and software obligations | N/A | N/A | |||||||||||||||||||||||||||||||||
| $ | ( | ( | |||||||||||||||||||||||||||||||||
* Related to foreign currency derivative entered into in connection with the sale of Coop. See Note 9—Investments, Loans and Long-Term Receivables.
The rabbi trust assets and investment in NOVONIX are recorded in the “Investments and long-term receivables” line item, the foreign currency derivative is recorded in the “Prepaid expenses and other current assets” line item, and floating-rate and fixed-rate debt are recorded in the “Short-term debt” and “Long-term debt” line items on our consolidated balance sheet. See Note 19—Derivatives and Financial Instruments, for information regarding where the assets and liabilities related to our commodity derivatives are recorded on our consolidated balance sheet.
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Nonrecurring Fair Value Measurements
Equity Investments and PP&E
In the fourth quarter of 2025, we remeasured the carrying value of an equity method investment in an NGL pipeline in Texas to fair value. Fair value was determined using an income approach. The valuation resulted in a Level 3 nonrecurring fair value measurement.
In the third quarter of 2025, we remeasured the carrying value of our equity method investment in WRB to fair value. Fair value was determined using a market approach. The valuation resulted in a Level 3 nonrecurring fair value measurement. See Note 5—Business Combinations and Note 9—Investments, Loans and Long-Term Receivables for additional information.
In the fourth quarter of 2024, we remeasured the carrying value of an equity method investment in a crude pipeline in Oklahoma to fair value. Fair value was determined using an income approach. The valuation resulted in a Level 3 nonrecurring fair value measurement.
In the second and third quarters of 2024, we remeasured the carrying value of the net PP&E and equity method investment in certain crude gathering, and gathering and processing asset groups in Texas to fair value. Fair value was determined using a market approach. These valuations resulted in Level 3 nonrecurring fair value measurements.
In the first quarter of 2024, we remeasured the carrying value of the net PP&E of certain crude oil processing and logistics assets in California to fair value. Fair value was determined using a market approach. These valuations resulted in Level 3 nonrecurring fair value measurements.
See Note 12—Impairments for additional information regarding before-tax impairments recorded in 2025 and 2024.
JET Management Holding Equity Method Investment
On December 1, 2025, we divested 65 % of our interest in Germany and Austria Marketing. We retained a 35 % non-operating equity interest in JET Management Holding subsequent to the divestiture. The fair value of our 35 % interest in JET Management Holding of $744 million was determined using a market approach. This valuation resulted in Level 3 nonrecurring fair value measurements. See Note 9—Investments, Loans and Long-Term Receivables for additional information on the transaction.
WRB Acquisition
On October 1, 2025, we acquired and began consolidating the financial results of WRB and, accordingly, accounted for the business combination using the acquisition method of accounting, which requires WRB’s assets and liabilities to be recorded at fair value as of the acquisition date on our consolidated balance sheet.
The preliminary fair value of PP&E was $2,767 million and was determined primarily using the cost approach. The cost approach used assumptions for the current replacement cost of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence. The preliminary fair value of inventories was $1,200 million and was determined using a market approach. These valuations resulted in Level 3 nonrecurring fair value measurements. See Note 5—Business Combinations for additional information on the transaction.
Coastal Bend Acquisition
On April 1, 2025, we acquired and began consolidating the financial results of Coastal Bend and, accordingly, accounted for the business combination using the acquisition method of accounting, which requires Coastal Bend’s assets and liabilities to be recorded at fair value as of the acquisition date on our consolidated balance sheet.
The preliminary fair value of PP&E was $2,224 million. The preliminary fair value of these assets was determined primarily using the cost approach. The cost approach used assumptions for the current replacement cost of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence. This valuation resulted in Level 3 nonrecurring fair value measurements. See Note 5—Business Combinations for additional information on the transaction.
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Note 21—Equity
Preferred Stock
Phillips 66 has 500 million shares of preferred stock authorized, with a par value of $0.01 per share, none of which have been issued.
Treasury Stock
On October 25, 2023, our Board of Directors approved a $5 billion increase to our share repurchase authorization. Since the inception of our share repurchase program in 2012, our Board of Directors has authorized an aggregate of $25 billion of repurchases of our outstanding common stock, and we have repurchased 248 million shares at an aggregate cost of $22.7 billion. In 2025, we repurchased 9.7 million shares at an aggregate cost of $1.2 billion. Our share repurchase authorizations do not expire. Any future share repurchases will be made at the discretion of management and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans. Shares of stock repurchased are held as treasury shares.
Our Board of Directors separately authorized two transactions in 2014 and 2018, which resulted in the repurchase of 52.4 million shares of Phillips 66 common stock with an aggregate value of $4.6 billion. In addition, in connection with a transaction in 2022, we issued 41.8 million shares of common stock from our treasury stock with an aggregate cost of $3.4 billion.
Common Stock Dividends
On February 11, 2026, our Board of Directors declared a quarterly cash dividend of $1.27 per common share, payable March 4, 2026, to shareholders of record at the close of business on February 23, 2026.
Noncontrolling Interests
At December 31, 2025 and 2024, our noncontrolling interests primarily represented Enbridge’s indirect economic interest in DCP LP. On June 15, 2023, as part of the DCP LP Merger, we acquired all publicly held common units of DCP LP and eliminated the public common unit noncontrolling interest in our consolidated financial statements from the DCP LP Merger date, forward. See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for further information on the DCP LP Merger and preferred unit redemptions.
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Note 22—Leases
We lease marine vessels, pipelines, storage tanks, railcars, service station sites, office buildings, corporate aircraft, land and other facilities and equipment. In determining whether an agreement contains a lease, we consider our ability to control the asset and whether third-party participation or vendor substitution rights limit our control. Certain leases include escalation clauses for adjusting rental payments to reflect changes in price indices, as well as renewal options and/or options to purchase the leased property. Renewal options have been included only when reasonably certain of exercise. There are no significant restrictions imposed on us in our lease agreements with regards to dividend payments, asset dispositions or borrowing ability. Certain leases have residual value guarantees, which may require additional payments at the end of the lease term if future fair values decline below contractual lease balances.
We discount lease obligations using our incremental borrowing rate. We separate costs for lease and service components for contracts involving marine vessels, consignment service stations, and refining processing equipment. For these contracts, we allocate the consideration payable between the lease and service components using the relative standalone prices of each component. For contracts involving all other asset types, we account for the lease and service components on a combined basis. For short-term leases, which are leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that is reasonably certain to be exercised, we do not recognize the right-of-use (ROU) asset and corresponding lease liability on our consolidated balance sheet.
The following table indicates the consolidated balance sheet line items that include the ROU assets and lease liabilities for our finance and operating leases at December 31:
| Millions of Dollars | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Finance Leases | Operating Leases | Finance Leases | Operating Leases | ||||||||||||||||||||
| Right-of-Use Assets | |||||||||||||||||||||||
| Prepaid expenses and other current assets | $ | — | — | ||||||||||||||||||||
| — | — | ||||||||||||||||||||||
| Other assets | — | — | |||||||||||||||||||||
| Total right-of-use assets | $ | ||||||||||||||||||||||
| Lease Liabilities | |||||||||||||||||||||||
| $ | — | — | |||||||||||||||||||||
| — | — | ||||||||||||||||||||||
| — | — | ||||||||||||||||||||||
| — | — | ||||||||||||||||||||||
| Total lease liabilities | $ | ||||||||||||||||||||||
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Future minimum lease payments at December 31, 2025, for finance and operating lease liabilities were:
| Millions of Dollars | ||||||||||||||
| Finance Leases | Operating Leases | |||||||||||||
| 2026 | $ | |||||||||||||
| 2027 | ||||||||||||||
| 2028 | ||||||||||||||
| 2029 | ||||||||||||||
| 2030 | ||||||||||||||
| Remaining years | ||||||||||||||
| Future minimum lease payments | ||||||||||||||
| Amount representing interest or discounts | ( | ( | ||||||||||||
| Total lease liabilities | $ | |||||||||||||
Our finance lease liabilities relate primarily to our marketing business, service station consignment agreements with a marketing joint venture, and a crude oil terminal in the United Kingdom. The lease liability for the terminal finance lease is subject to foreign currency translation adjustments each reporting period.
Components of net lease cost for the years ended December 31 were:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Finance lease cost | |||||||||||||||||
| Amortization of right-of-use assets | $ | ||||||||||||||||
| Interest on lease liabilities | |||||||||||||||||
| Total finance lease cost | |||||||||||||||||
| Operating lease cost | |||||||||||||||||
| Short-term lease cost | |||||||||||||||||
| Variable lease cost | |||||||||||||||||
| Sublease income | ( | ( | ( | ||||||||||||||
| Total net lease cost | $ | ||||||||||||||||
Cash paid for amounts included in the measurement of our lease liabilities for the years ended December 31 was:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating cash outflows—finance leases | $ | ||||||||||||||||
| Operating cash outflows—operating leases | |||||||||||||||||
| Financing cash outflows—finance leases | |||||||||||||||||
During the years ended December 31, 2025, 2024 and 2023, we recorded noncash ROU assets and corresponding operating lease liabilities totaling $1,125 million, $547 million and $398 million, respectively, related to new and modified lease agreements, including leases acquired as part of the business combinations. See Note 5—Business Combinations for additional information.
145
The weighted-average remaining lease terms and discount rates for our lease liabilities at December 31 were:
| 2025 | 2024 | ||||||||||
| Weighted-average remaining lease term—finance leases (years) | |||||||||||
| Weighted-average remaining lease term—operating leases (years) | |||||||||||
| Weighted-average discount rate—finance leases | % | ||||||||||
| Weighted-average discount rate—operating leases | |||||||||||
Note 23—Pension and Postretirement Plans
The following table provides a reconciliation of the projected benefit obligations and plan assets for our pension plans and accumulated benefit obligations for our other postretirement benefit plans:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||||||||||||||
| Change in Benefit Obligations | |||||||||||||||||||||||||||||||||||
| Benefit obligations at January 1 | $ | ||||||||||||||||||||||||||||||||||
| Service cost | |||||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
| Plan participant contributions | |||||||||||||||||||||||||||||||||||
| Actuarial loss (gain) | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Benefits paid | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Divestiture* | ( | ||||||||||||||||||||||||||||||||||
| Foreign currency exchange rate change | ( | ||||||||||||||||||||||||||||||||||
| Benefit obligations at December 31 | $ | ||||||||||||||||||||||||||||||||||
| Change in Fair Value of Plan Assets | |||||||||||||||||||||||||||||||||||
| Fair value of plan assets at January 1 | $ | ||||||||||||||||||||||||||||||||||
| Actual return on plan assets | |||||||||||||||||||||||||||||||||||
| Company contributions | |||||||||||||||||||||||||||||||||||
| Plan participant contributions | |||||||||||||||||||||||||||||||||||
| Benefits paid | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Divestiture* | ( | ||||||||||||||||||||||||||||||||||
| Foreign currency exchange rate change | ( | ||||||||||||||||||||||||||||||||||
| Fair value of plan assets at December 31 | $ | ||||||||||||||||||||||||||||||||||
| Funded Status at December 31 | $ | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
* Derecognition in connection with the disposition of | |||||||||||||||||||||||||||||||||||
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Amounts recognized in the consolidated balance sheet for our pension and other postretirement benefit plans at December 31 include:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||||||||||||||
| Amounts Recognized in the Consolidated Balance Sheet | |||||||||||||||||||||||||||||||||||
| Noncurrent assets | $ | ||||||||||||||||||||||||||||||||||
| Current liabilities | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Noncurrent liabilities | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Total recognized | $ | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Included in accumulated other comprehensive loss at December 31 were the following before-tax amounts that had not been recognized in net periodic benefit cost:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||||||||||||||
| Unrecognized net actuarial loss (gain) | $ | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
| Millions of Dollars | |||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||||||||||||||
| Sources of Change in Other Comprehensive Income | |||||||||||||||||||||||||||||||||||
| Net actuarial gain (loss) arising during the period | $ | ( | ( | ||||||||||||||||||||||||||||||||
| Divestiture* | ( | ||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss (gain) and settlements | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total recognized in other comprehensive income | $ | ( | ( | ( | |||||||||||||||||||||||||||||||
* Related to the disposition of 65 % of our interest in Germany and Austria Marketing and is included in the “Net gain on dispositions” line item on the consolidated statement of income. See Note 9—Investments, Loans and Long-Term Receivables.
The accumulated benefit obligations for all U.S. and international pension plans were $2,298 million and $552 million, respectively, at December 31, 2025, and $2,218 million and $609 million, respectively, at December 31, 2024.
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Information for U.S. and international pension plans with an accumulated benefit obligation in excess of plan assets at December 31 was:
| Millions of Dollars | |||||||||||||||||||||||
| Pension Benefits | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||
| Accumulated benefit obligations | $ | ||||||||||||||||||||||
Fair value of plan assets | |||||||||||||||||||||||
Information for U.S. and international pension plans with a projected benefit obligation in excess of plan assets at December 31 was:
| Millions of Dollars | |||||||||||||||||||||||
| Pension Benefits | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||
| Projected benefit obligations | $ | ||||||||||||||||||||||
Fair value of plan assets | |||||||||||||||||||||||
Components of net periodic benefit cost for all defined benefit plans are presented in the table below:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Net Periodic Benefit Cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss (gain) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Settlement losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost (credit)* | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.
148
In determining net periodic benefit cost, we amortize prior service costs on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plan. For net actuarial gains and losses, we amortize 10 % of the unamortized balance each year. The amount subject to amortization is determined on a plan-by-plan basis.
The following weighted-average assumptions were used to determine benefit obligations and net periodic benefit costs for the years ended December 31:
| Pension Benefits | Other Benefits | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||||||||||||||||||||
| Assumptions Used to Determine Benefit Obligations: | |||||||||||||||||||||||||||||||||||
| Discount rate | % | ||||||||||||||||||||||||||||||||||
| Rate of compensation increase | |||||||||||||||||||||||||||||||||||
| Interest crediting rate on cash balance plan | |||||||||||||||||||||||||||||||||||
| Assumptions Used to Determine Net Periodic Benefit Cost: | |||||||||||||||||||||||||||||||||||
| Discount rate | % | ||||||||||||||||||||||||||||||||||
| Expected return on plan assets | |||||||||||||||||||||||||||||||||||
| Rate of compensation increase | |||||||||||||||||||||||||||||||||||
| Interest crediting rate on cash balance plan | |||||||||||||||||||||||||||||||||||
For both U.S. and international pension plans, the overall expected long-term rate of return is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. We rely on a variety of independent market forecasts in developing the expected rate of return for each class of assets.
For the year ended December 31, 2025, actuarial losses resulted in increases in our U.S. pension benefit obligations of $104 million and actuarial gains resulted in a decrease in our international pension benefit obligation of $24 million. For the year ended December 31, 2024, actuarial losses resulted in increases in our U.S. pension benefit obligations of $68 million and actuarial gains resulted in a decrease in our international pension benefit obligation of $48 million. The primary driver for the actuarial losses in 2025 were decreases in the discount rates and lump-sum conversion rates. The primary driver for the actuarial gains in 2025 and 2024 were increases in the discount rates. The primary driver for the actuarial losses in 2024 were changes in demographic experience.
For the year ended December 31, 2025, the weighted-average actual return on plan assets was 11 %, which resulted in an increase in our U.S. and international plan assets of $269 million and $34 million, respectively. For the year ended December 31, 2024, the weighted-average actual return on plan assets was 7 %, which resulted in an increase in our U.S. and international plan assets of $172 million and $14 million, respectively. The primary driver of the return on plan assets in 2025 and 2024 was fluctuations in the equity and fixed income markets.
Our other postretirement benefit plans for health insurance are contributory. Effective December 31, 2012, we terminated the subsidy for retiree medical plans. Since January 1, 2013, eligible employees have been able to utilize notional amounts credited to an account during their period of service with the company to pay all, or a portion, of their cost to participate in postretirement health insurance. In general, employees hired after December 31, 2012, will not receive credits to an account, but will have unsubsidized access to health insurance through the plan. The cost of health insurance will be adjusted annually by the company’s actuary to reflect actual experience and expected health care cost trends. The measurement of the accumulated benefit obligation assumes a health care cost trend rate of 8.00 % in 2026 that declines to 5 % by 2032.
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Plan Assets
The investment strategy for managing pension plan assets is to seek a reasonable rate of return relative to an appropriate level of risk and provide adequate liquidity for benefit payments and portfolio management. We follow a policy of diversifying pension plan assets across asset classes, investment managers, and individual holdings. As a result, our plan assets have no significant concentrations of credit risk. Asset classes that are considered appropriate include equities, fixed income, cash, real estate and infrastructure investments and insurance contracts. Plan fiduciaries may consider and add other asset classes to the investment program from time to time. The target allocations for plan assets are approximately 43 % equity securities, 34 % debt securities, 10 % real estate investments and 13 % in all other types of investments as of December 31, 2025. Generally, the investments in the plans are publicly traded, therefore minimizing the liquidity risk in the portfolio.
The following is a description of the valuation methodologies used for the pension plan assets.
•Fair values of equity securities and government debt securities are based on quoted market prices.
•Fair values of corporate debt securities are estimated using recently executed transactions and market price quotations. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices.
•Fair values of cash and cash equivalents approximate their carrying amounts.
•Fair values of insurance contracts are valued at the present value of the future benefit payments owed by the insurance company to the plans’ participants.
•Fair values of investments in common/collective trusts (CCT) and real estate and infrastructure investments, which include a CCT, limited partnerships, and other real estate funds, are valued at the net asset value (NAV) as a practical expedient. The NAV is based on the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. These investments valued at NAV are not classified within the fair value hierarchy, but are presented in the fair value table to permit reconciliation of total plan assets to the amounts presented in the fair value table.
The fair values of our pension plan assets at December 31, by asset class, were:
| Millions of Dollars | |||||||||||||||||||||||||||||||||||||||||||||||
| United States | International | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Government debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Total assets in the fair value hierarchy | |||||||||||||||||||||||||||||||||||||||||||||||
| Common/collective trusts measured at NAV | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate and infrastructure investments measured at NAV | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||||||||||||||||||||||||||
150
| Millions of Dollars | |||||||||||||||||||||||||||||||||||||||||||||||
| United States | International | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity securities | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Government debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Total assets in the fair value hierarchy | |||||||||||||||||||||||||||||||||||||||||||||||
| Common/collective trusts measured at NAV | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate and infrastructure investments measured at NAV | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||||||||||||||||||||||||||
The following table is a reconciliation of the changes in our Level 3 plan asset balance:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at January 1 | $ | ||||||||||
| Transfer in | |||||||||||
| Actual return on plan assets | ( | ( | |||||||||
| Divestiture | ( | ||||||||||
| Foreign currency exchange rate change | ( | ||||||||||
| Balance at December 31 | $ | ||||||||||
Our funding policy for U.S. plans is to contribute at least the minimum required by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986, as amended. Contributions to international plans are subject to local laws and tax regulations. Actual contribution amounts are dependent upon plan asset returns, changes in pension obligations, regulatory environments, and other economic factors. In 2026, we expect to contribute approximately $200 million to our U.S. pension plans and other postretirement benefit plans and $4 million to our international pension plans.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid to plan participants in the years indicated:
| Millions of Dollars | |||||||||||||||||
| Pension Benefits | Other Benefits | ||||||||||||||||
| U.S. | Int’l. | ||||||||||||||||
| 2026 | $ | ||||||||||||||||
| 2027 | |||||||||||||||||
| 2028 | |||||||||||||||||
| 2029 | |||||||||||||||||
| 2030 | |||||||||||||||||
| 2031-2035 | |||||||||||||||||
151
Defined Contribution Plans
Most U.S. employees are eligible to participate in the Phillips 66 Savings Plan (Savings Plan). Employees can contribute up to 75 % of their eligible pay, subject to certain statutory limits, in the Savings Plan to a choice of investment funds. For the years ended December 31, 2025, 2024, and 2023, Phillips 66 provided a company match of participant contributions up to 8 0 % to 4 % of eligible pay based on management discretion.
For the years ended December 31, 2025, 2024 and 2023, we recorded expense of $163 million, $155 million and $196 million, respectively, related to our contributions to the Savings Plan.
152
Note 24—Share-Based Compensation Plans
Share-based payment awards, including stock options, Restricted Stock Unit (RSU) awards, and performance awards, are granted to our employees, nonemployee directors and other plan participants by the Human Resources and Compensation Committee (HRCC) of our Board of Directors under the applicable Omnibus Stock and Performance Incentive Plan of Phillips 66. Prior to May 11, 2022, share-based payment awards were granted under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2013 P66 Omnibus Plan). On May 11, 2022, Phillips 66’s shareholders approved the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2022 P66 Omnibus Plan), which replaced the 2013 P66 Omnibus Plan. No future awards will be made under the 2013 P66 Omnibus Plan. As of December 31, 2025, approximately 11 million shares of Phillips 66’s common stock remained available to be issued to settle share-based payment awards under the 2022 P66 Omnibus Plan.
Total share-based compensation expense recognized in income and the associated income tax benefit for the years ended December 31 were:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Restricted stock units | $ | ||||||||||||||||
| Performance share units | |||||||||||||||||
| Stock options | |||||||||||||||||
| Other | |||||||||||||||||
| Total share-based compensation expense | $ | ||||||||||||||||
| Income tax benefit | $ | ( | ( | ( | |||||||||||||
153
Restricted Stock Units
Generally, RSUs are granted annually under the provisions of the applicable Phillips 66 incentive plan, and vest either ratably over three years following the grant date or cliff vest at the end of three years for awards granted in 2025, 2024 and 2023. For awards granted prior to 2023, RSUs cliff vest at the end of three years . The grant date fair value is equal to the average of the high and low market price of our stock on the grant date. The recipients receive a quarterly dividend equivalent cash payment until the RSU is settled by issuing one share of our common stock for each RSU at the end of the service period. For recipients outside of the United States and United Kingdom, expected dividend equivalents during the service period are reduced from the grant date fair value on the grant date. RSUs granted to retirement-eligible employees are not subject to forfeiture ten months
The following table summarizes our RSU activity from January 1, 2025, to December 31, 2025:
| Stock Units | Weighted-Average Grant-Date Fair Value | ||||||||||
| Outstanding at January 1, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Forfeited | ( | ||||||||||
| Issued | ( | ||||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||
| Not Vested at December 31, 2025 | $ | ||||||||||
At December 31, 2025, the remaining unrecognized compensation cost from unvested RSU awards was $92 million, which will be recognized over a weighted-average period of 19 months, the longest period being 35 months.
During 2024 and 2023, we granted RSUs with a weighted-average grant-date fair value of $145.65 and $100.39 , respectively. During 2025, 2024 and 2023, we issued shares with an aggregate fair value of $186 million, $206 million and $126 million, respectively, to settle RSUs.
Performance Share Units
Under the applicable Phillips 66 incentive plan, senior management is annually awarded restricted performance share units (PSUs) with three-year performance periods. These awards vest when the HRCC approves the three-year performance results, which represents the grant date. Retirement-eligible employees may retain a prorated share of the award if they retire prior to the grant date. PSUs are classified as liability awards and compensation expense is recognized over the three-year performance periods.
PSUs granted under the applicable Phillips 66 incentive plan are settled by cash payments equal to the fair value of the awards, which is based on the market prices of our stock near the end of the performance periods. The HRCC must approve the three-year performance results prior to payout. Dividend equivalents are not paid on these awards.
PSUs granted under prior incentive compensation plans were classified as equity awards. These equity awards are settled upon an employee’s retirement by issuing one share of our common stock for each PSU held. Dividend equivalents are paid on these awards.
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The following table summarizes our PSU activity from January 1, 2025, to December 31, 2025:
| Performance Share Units | Weighted-Average Grant-Date Fair Value | ||||||||||
| Outstanding at January 1, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Forfeited | |||||||||||
| Issued | ( | ||||||||||
| Cash settled | ( | ||||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||
At December 31, 2025, there was no remaining unrecognized compensation cost from unvested PSU awards.
During 2024 and 2023, we granted PSUs with a weighted-average grant-date fair value of $130.22 and $102.66 , respectively. During 2025, 2024 and 2023, we issued shares with an aggregate fair value of $12 million, $14 million and $13 million, respectively, to settle PSUs. During 2025, 2024 and 2023, we cash settled PSUs with an aggregate fair value of $106 million, $131 million and $36 million, respectively.
Stock Options
Stock options granted under the provisions of the applicable Phillips 66 incentive plan and earlier plans permit purchases of our common stock at exercise prices equivalent to the average of the high and low market price of our stock on the date the options were granted. The options have terms of 10 years and vest ratably over three years following the grant date, with one-third of the options becoming exercisable each year on the grant date anniversary. Options granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date. No
The following table summarizes our stock option activity from January 1, 2025, to December 31, 2025:
| Options | Weighted-Average Exercise Price | ||||||||||
| Outstanding at January 1, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Forfeited | ( | ||||||||||
| Exercised | ( | ||||||||||
| Outstanding at December 31, 2025 | $ | ||||||||||
| Vested at December 31, 2025 | $ | ||||||||||
| Exercisable at December 31, 2025 | $ | ||||||||||
The weighted-average remaining contractual terms of vested options and exercisable options at December 31, 2025, were 5.20 and 5.06 years, respectively. During 2025, we received $107 million in cash and realized an income tax benefit of $12 million from the exercise of options. At December 31, 2025, the remaining unrecognized compensation expense from unvested options was $0.3 million, which will be recognized over a weighted-average period of 3 months, the longest period being 5 months.
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In 2025 and 2024, no options were granted. In 2023, we granted options with a weighted-average grant-date fair value of $27.45 . During 2025, 2024 and 2023, employees exercised options with an aggregate intrinsic value of $55 million, $68 million and $52 million, respectively. At December 31, 2025, the aggregate intrinsic value of vested and exercisable options was $109 million and $103 million, respectively.
The following table provides the significant assumptions used to calculate the grant-date fair values of options granted in 2023, as calculated using the Black-Scholes-Merton option-pricing model:
| 2023 | ||||||||
| Risk-free interest rate | ||||||||
| Dividend yield | ||||||||
| Volatility factor | ||||||||
| Expected life (years) | ||||||||
No options were granted in 2025 or 2024. | ||||||||
We calculate the volatility factor using historical Phillips 66 end-of-week closing stock prices. We periodically calculate the average period of time elapsed between grant dates and exercise dates of past grants to estimate the expected life of new option grants.
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Note 25—Income Taxes
Components of income tax expense (benefit) were:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income Tax Expense (Benefit) | |||||||||||||||||
| Federal | |||||||||||||||||
| Current | $ | ||||||||||||||||
| Deferred | ( | ||||||||||||||||
| Foreign | |||||||||||||||||
| Current | |||||||||||||||||
| Deferred | ( | ||||||||||||||||
| State and local | |||||||||||||||||
| Current | |||||||||||||||||
| Deferred | ( | ||||||||||||||||
| $ | |||||||||||||||||
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA) that includes, among other provisions, changes to the U.S. corporate income tax system, including provisions that allow a company to purchase transferable tax credits. In 2024 and 2023, we executed agreements to purchase eligible tax credits for a total of $485 million and $262 million, respectively. In 2024 and 2023, we paid $551 million and $196 million to our counterparties, respectively. These tax credits were used to offset estimated tax payments in 2024 and 2023.
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax liabilities and assets at December 31 were:
| Millions of Dollars | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred Tax Liabilities | |||||||||||
| Properties, plants and equipment, and intangibles | $ | ||||||||||
| Investment in joint ventures* | |||||||||||
| Investment in subsidiaries** | |||||||||||
| Other | |||||||||||
| Total deferred tax liabilities | |||||||||||
| Deferred Tax Assets | |||||||||||
| Benefit plan accruals | |||||||||||
| Loss and credit carryforwards | |||||||||||
| Asset retirement obligations and accrued environmental costs | |||||||||||
| Other financial accruals and deferrals | |||||||||||
| Inventory | |||||||||||
| Other | |||||||||||
| Total deferred tax assets | |||||||||||
| Less: valuation allowance | |||||||||||
| Net deferred tax assets | |||||||||||
| Net deferred tax liabilities | $ | ||||||||||
*2024 includes activity associated with our | |||||||||||
**Includes activity associated with our consolidated investments in Phillips 66 Partners and DCP LP. 2025 also includes activity associated with our consolidated investment in WRB, see Note 9—Investments, Loans and Long-Term Receivables for additional information. | |||||||||||
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At December 31, 2025, the loss and credit carryforward deferred tax assets were primarily related to a foreign tax credit carryforward in the United States of $150 million; a state tax net operating loss carryforward of $49 million; and capital loss and net operating loss carryforwards in the United Kingdom of $10 million. State net operating loss carryforwards begin to expire in 2040. Foreign tax credit carryforwards, which have a full valuation allowance against them, begin to expire in 2029. The other loss and credit carryforwards, all of which relate to foreign operations, and have a full valuation allowance against them, have indefinite lives.
Valuation allowances have been established to reduce deferred tax assets to an amount that will, more likely than not, be realized. During the year ended December 31, 2025, our total valuation allowance balance increased by $23 million. Based on our historical taxable income, expectations for the future and available tax planning strategies, management expects the remaining net deferred tax assets will be realized as offsets to reversing deferred tax liabilities and the tax consequences of future taxable income.
Earnings of our foreign subsidiaries and foreign joint ventures after December 31, 2017, are generally not subject to incremental income taxes in the United States or withholding taxes in foreign countries upon repatriation. As such, we only assert that the earnings of one of our foreign subsidiaries are indefinitely reinvested. At December 31, 2025 and 2024, the unrecorded deferred tax liability related to the undistributed earnings of this foreign subsidiary was not material.
A deferred income tax liability has not been recognized on the excess of the book basis over the tax basis of an investment in a controlled foreign subsidiary that is essentially permanent in duration. Recognition of a deferred tax liability will only be required if it becomes apparent that this subsidiary will be sold or liquidated in the foreseeable future. At December 31, 2025, the temporary difference resulting from the investment book basis exceeding the tax basis was $1,766 million. Determination of the unrecognized deferred income tax liability related to this temporary difference is not practicable given the variables involved in performing such a calculation.
We file tax returns in the U.S. federal jurisdiction and in many foreign and state jurisdictions. Unrecognized tax benefits reflect the difference between positions taken on income tax returns and the amounts recognized in the financial statements.
The following table is a reconciliation of the changes in our unrecognized income tax benefits balance:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at January 1 | $ | ||||||||||||||||
| Additions for tax positions of current year | |||||||||||||||||
| Additions for tax positions of prior years | |||||||||||||||||
| Reductions for tax positions of prior years | ( | ( | |||||||||||||||
| Balance at December 31 | $ | ||||||||||||||||
Included in the balance of unrecognized income tax benefits at December 31, 2025, 2024 and 2023, were $87 million, $87 million and $100 million, respectively, which, if recognized, would affect our effective income tax rate.
At December 31, 2025, 2024 and 2023, accrued liabilities for interest and penalties, net of accrued income taxes, totaled $1 million, $1 million and $8 million, respectively. These accruals had no impact on our results for the year ended December 31, 2025, increased our results for the year ended December 31, 2024, by $7 million and decreased our results for the year ended December 31, 2023, by $1 million.
Audits in significant jurisdictions are generally complete as follows: United Kingdom (2022), Germany (2017) and United States (2020). Certain issues remain in dispute for audited years, and unrecognized income tax benefits for years still subject to or currently undergoing an audit are subject to change. As a consequence, the balance in unrecognized income tax benefits can be expected to fluctuate from period to period. Although it is reasonably possible such changes could be significant when compared with our total unrecognized income tax benefits, the amount of change is not estimable.
158
| The amounts of U.S. and foreign income before income taxes, with a reconciliation of income tax at the federal statutory rate to the recorded income tax expense (benefit), were: | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||||||||||||||
| United States | $ | % | |||||||||||||||||||||||||||||||||
| Foreign | |||||||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||
| Federal statutory income tax | |||||||||||||||||||||||||||||||||||
| State income tax, net of federal income tax benefit* | ( | ( | |||||||||||||||||||||||||||||||||
| Foreign tax effects | |||||||||||||||||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between United Kingdom and United States | |||||||||||||||||||||||||||||||||||
| Non-taxable gain on disposition** | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||
| Germany | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between Germany and United States | |||||||||||||||||||||||||||||||||||
| Non-taxable gain on disposition*** | ( | ( | |||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Other foreign jurisdictions | ( | ( | |||||||||||||||||||||||||||||||||
| Tax law and rate changes | |||||||||||||||||||||||||||||||||||
| Effect of cross-border tax laws | |||||||||||||||||||||||||||||||||||
| Disposition of Coop** | |||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Tax credits | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Changes in valuation allowances | |||||||||||||||||||||||||||||||||||
| Non-taxable or non-deductible items | |||||||||||||||||||||||||||||||||||
| Discount on purchased credits | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | |||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ||||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||
| Note - items that do not meet the 5% threshold for disaggregation have not been separately stated. | |||||||||||||||||||||||||||||||||||
* The states that contribute to the majority (greater than 50 percent) of the tax effect in this category include Illinois, Oklahoma, New Jersey, California, and Louisiana for 2025 and 2024, and California, New Jersey, Oklahoma, and Illinois for 2023. | |||||||||||||||||||||||||||||||||||
** Related to the disposition of our ownership interest in Coop. See Note 9—Investments, Loans and Long-Term Receivables for additional information. | |||||||||||||||||||||||||||||||||||
*** Related to the disposition of | |||||||||||||||||||||||||||||||||||
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Note 26—Accumulated Other Comprehensive Loss
Changes in the balances of each component of accumulated other comprehensive loss were as follows:
| Millions of Dollars | |||||||||||||||||||||||
| Defined Benefit Plans | Foreign Currency Translation | Hedging | Accumulated Other Comprehensive Loss | ||||||||||||||||||||
| December 31, 2022 | $ | ( | ( | ( | ( | ||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
| Defined benefit plans | |||||||||||||||||||||||
| Amortization of net actuarial loss and settlements* | — | — | |||||||||||||||||||||
| Foreign currency translation | — | — | — | — | |||||||||||||||||||
| Hedging | — | — | — | — | |||||||||||||||||||
| Net current period other comprehensive income (loss) | ( | ||||||||||||||||||||||
| December 31, 2023 | ( | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
| Defined benefit plans | |||||||||||||||||||||||
| Amortization of net actuarial loss and settlements* | — | — | |||||||||||||||||||||
| Foreign currency translation | — | — | — | — | |||||||||||||||||||
| Hedging | — | — | — | — | |||||||||||||||||||
| Net current period other comprehensive loss | ( | ( | ( | ||||||||||||||||||||
| December 31, 2024 | ( | ( | ( | ( | |||||||||||||||||||
| Other comprehensive loss before reclassifications | |||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
| Defined benefit plans | |||||||||||||||||||||||
| Amortization of net actuarial loss and settlements* | — | — | |||||||||||||||||||||
| Divestiture** | ( | — | — | ( | |||||||||||||||||||
Foreign currency translation**† | — | ( | — | ( | |||||||||||||||||||
| Hedging | — | — | — | — | |||||||||||||||||||
| Net current period other comprehensive income | |||||||||||||||||||||||
| December 31, 2025 | $ | ( | ( | ( | ( | ||||||||||||||||||
* Included in the computation of net periodic benefit cost. See Note 23—Pension and Postretirement Plans for additional information.
** Related to the disposition of 65 % of our interest in Germany and Austria Marketing and is included in the “Net gain on dispositions” line item on the consolidated statement of income. See Note 9—Investments, Loans and Long-Term Receivables.
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Note 27—Cash Flow Information
Supplemental Cash Flow Information
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash Payments (Receipts) | |||||||||||||||||
| Interest | $ | ||||||||||||||||
| Federal Income Taxes | |||||||||||||||||
| State Income Taxes | |||||||||||||||||
| California | ( | ** | |||||||||||||||
| Illinois | ** | ** | |||||||||||||||
| New Jersey | ( | ** | |||||||||||||||
| Oklahoma | ( | ** | ** | ||||||||||||||
| Other | ( | ||||||||||||||||
| Foreign Income Taxes | |||||||||||||||||
| Austria | ** | ** | |||||||||||||||
| Canada | ** | ||||||||||||||||
| Germany | |||||||||||||||||
| United Kingdom | ( | ||||||||||||||||
| Other | |||||||||||||||||
| Total income taxes* | |||||||||||||||||
* Federal income tax payments in 2024 and 2023 include $ | |||||||||||||||||
| ** The amount of income taxes paid during the year does not meet the 5% disaggregation threshold. | |||||||||||||||||
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Non-cash investing activities | |||||||||||||||||
| Derecognition of government obligations | $ | ||||||||||||||||
| Reduction of WRB investment balance | |||||||||||||||||
| Non-cash financing activities | |||||||||||||||||
| Derecognition of Discharged Notes | $ | ( | |||||||||||||||
| Distribution of Advance Term Loan from WRB | ( | ||||||||||||||||
| Reduction in borrowings under Receivables Securitization Facility | ( | ( | |||||||||||||||
See Note 15—Debt for additional information regarding the above non-cash activities.
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Note 28—Other Financial Information
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Interest and Debt Expense | |||||||||||||||||
| Incurred | |||||||||||||||||
Debt | $ | ||||||||||||||||
Other | |||||||||||||||||
| Capitalized | ( | ( | ( | ||||||||||||||
| Expensed | $ | ||||||||||||||||
| Other Income | |||||||||||||||||
| Interest income | $ | ||||||||||||||||
| Unrealized investment loss—NOVONIX | ( | ( | |||||||||||||||
| Other, net* | |||||||||||||||||
| $ | |||||||||||||||||
* Includes derivatives-related activities. See Note 19—Derivatives and Financial Instruments, for additional information. | |||||||||||||||||
| Research and Development Expenses | $ | ||||||||||||||||
| Advertising Expenses | $ | ||||||||||||||||
| Foreign Currency Transaction (Gains) Losses | |||||||||||||||||
| Midstream | $ | ||||||||||||||||
| Chemicals | |||||||||||||||||
| Refining | ( | ||||||||||||||||
| Marketing and Specialties | |||||||||||||||||
| Renewable Fuels | |||||||||||||||||
| Corporate and Other | ( | ||||||||||||||||
| $ | ( | ||||||||||||||||
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Note 29—Related Party Transactions
Significant transactions with related parties were:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating revenues and other income (a)(d) | $ | ||||||||||||||||
| Purchases (b)(d) | |||||||||||||||||
| Operating expenses and selling, general and administrative expenses (c) | |||||||||||||||||
(a)We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes) and refined petroleum products to several of our equity affiliates in the M&S segment, including OnCue, CF United LLC (CF United), and JET Management Holding. See Note 9—Investments, Loans and Long-Term Receivables for additional information on JET Management Holding. We also sold certain feedstocks and intermediate products to WRB and acted as an agent for WRB in supplying crude oil and other feedstocks for a fee. In addition, we charged several of our equity affiliates, including CPChem, for the use of common facilities, such as steam generators, waste and water treaters and warehouse facilities.
(b)We purchased crude oil, refined petroleum products, NGL and solvents from WRB. We also purchased natural gas and NGL from DCP Midstream and CPChem, as well as other feedstocks from various equity affiliates, for use in our refinery and fractionation processes. In addition, we purchased base oils and fuel products from Excel Paralubes for use in our specialty and refining businesses. We paid NGL fractionation fees to CPChem. We also paid fees to various pipeline equity affiliates for transporting crude oil, refined petroleum products and NGL.
(c)We paid consignment fees to CF United, and utility and processing fees to various equity affiliates.
(d)As a result of the WRB acquisition, we began consolidating WRB’s financial results beginning on October 1, 2025. As such, transactions after this date are not presented in the table above. See Note 5—Business Combinations for additional information.
163
Note 30—Segment Disclosures and Related Information
Our operating segments are:
1)Midstream—Provides crude oil and refined petroleum product transportation, terminaling and storage services, as well as natural gas and NGL gathering, processing, transportation, fractionation, storage and marketing services in the United States. In addition, this segment exports liquefied petroleum gas to global markets.
2)Chemicals—Consists of our 50 % equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.
3)Refining—Refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels. At December 31, 2025, this segment included 10 refineries in the United States and Europe.
4)Marketing and Specialties—Purchases for resale and markets refined products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.
5)Renewable Fuels—Processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.
Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, business transformation restructuring costs, our investment in NOVONIX, and various other corporate activities. Corporate assets include all cash, cash equivalents, income tax-related assets and enterprise information technology assets. Effective in the first quarter of 2026, activities associated with decommissioning and redeveloping at our idled Los Angeles Refinery will be included in Corporate and Other. See Note 4—Restructuring for additional information.
Intersegment sales are at prices that we believe approximate market.
Through our implementation of ASU No. 2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures,” we are including additional disclosures regarding significant segment expenses regularly provided to our chief operating decision maker (CODM), who is our Chief Executive Officer. The measure of segment profit or loss reviewed by our CODM is “income (loss) before income taxes.” The CODM uses segment income (loss) before income taxes to allocate resources to each segment predominantly in the annual budgeting and forecasting process. The CODM compares budget-to-actual segment income (loss) before income taxes on a monthly and quarterly basis and considers trend analyses, as well as other market factors when making decisions about allocating capital and personnel to the segments. The measure of segment assets reported on our consolidated balance sheet reviewed by our CODM is “Total Assets.”
164
Analysis of Results by Operating Segment
| Millions of Dollars | ||||||||||||||||||||||||||
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||
| Operating Segments | ||||||||||||||||||||||||||
| Midstream | Chemicals | Refining† | M&S | Renewable Fuels | Corporate and Other | Consolidating Adjustments | Total Consolidated | |||||||||||||||||||
| Revenues and Other Income | ||||||||||||||||||||||||||
| Third-party sales and other operating revenues | $ | |||||||||||||||||||||||||
| Intercompany revenues | ( | — | ||||||||||||||||||||||||
| Total sales and other operating revenues | ( | |||||||||||||||||||||||||
| Equity in earnings of affiliates | ( | ( | ||||||||||||||||||||||||
| Net gain on dispositions | ||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||
| Total Revenues and Other Income | ( | |||||||||||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||
| Purchased crude oil and products | ( | |||||||||||||||||||||||||
| Operating expenses* | ( | |||||||||||||||||||||||||
| Selling, general and administrative expenses* | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Impairments | ||||||||||||||||||||||||||
| Taxes other than income taxes | ( | |||||||||||||||||||||||||
| Interest and debt expense | ||||||||||||||||||||||||||
| Other segment items** | ||||||||||||||||||||||||||
| Total Costs and Expenses | ( | |||||||||||||||||||||||||
| Income (loss) before income taxes | $ | ( | ( | ( | ||||||||||||||||||||||
| * These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM. | ||||||||||||||||||||||||||
| ** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.” | ||||||||||||||||||||||||||
† Includes our proportional share of our equity method investment in WRB through September 30, 2025. Beginning on October 1, 2025, | ||||||||||||||||||||||||||
| Millions of Dollars | |||||||||||||||||||||||
| As of and for the Year Ended December 31, 2025 | |||||||||||||||||||||||
| Operating Segments | |||||||||||||||||||||||
| Midstream | Chemicals | Refining† | M&S | Renewable Fuels | Corporate and Other | Total Consolidated | |||||||||||||||||
| Interest Income | $ | ||||||||||||||||||||||
| Investments In and Advances to Affiliates | |||||||||||||||||||||||
| Total Assets | |||||||||||||||||||||||
| Capital Expenditures and Investments | |||||||||||||||||||||||
† Includes our proportional share of our equity method investment in WRB through September 30, 2025. Beginning on October 1, 2025, | |||||||||||||||||||||||
165
| Millions of Dollars | ||||||||||||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| Operating Segments | ||||||||||||||||||||||||||
| Midstream | Chemicals | Refining | M&S | Renewable Fuels | Corporate and Other | Consolidating Adjustments | Total Consolidated | |||||||||||||||||||
| Revenues and Other Income | ||||||||||||||||||||||||||
| Third-party sales and other operating revenues | $ | |||||||||||||||||||||||||
| Intercompany revenues | ( | — | ||||||||||||||||||||||||
| Total sales and other operating revenues | ( | |||||||||||||||||||||||||
| Equity in earnings of affiliates | ( | |||||||||||||||||||||||||
| Net gain on dispositions | ( | |||||||||||||||||||||||||
| Other income | ( | |||||||||||||||||||||||||
| Total Revenues and Other Income | ( | |||||||||||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||
| Purchased crude oil and products | ( | |||||||||||||||||||||||||
| Operating expenses* | ( | ( | ||||||||||||||||||||||||
| Selling, general and administrative expenses* | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Impairments | ||||||||||||||||||||||||||
| Taxes other than income taxes | ( | |||||||||||||||||||||||||
| Interest and debt expense | ||||||||||||||||||||||||||
| Other segment items** | ||||||||||||||||||||||||||
| Total Costs and Expenses | ( | ( | ||||||||||||||||||||||||
| Income (loss) before income taxes | $ | ( | ( | ( | ||||||||||||||||||||||
| * These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM. | ||||||||||||||||||||||||||
| ** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.” | ||||||||||||||||||||||||||
| Millions of Dollars | |||||||||||||||||||||||
| As of and for the Year Ended December 31, 2024 | |||||||||||||||||||||||
| Operating Segments | |||||||||||||||||||||||
| Midstream | Chemicals | Refining | M&S | Renewable Fuels | Corporate and Other | Total Consolidated | |||||||||||||||||
| Interest Income | $ | ||||||||||||||||||||||
| Investments In and Advances to Affiliates | |||||||||||||||||||||||
| Total Assets | |||||||||||||||||||||||
| Capital Expenditures and Investments | |||||||||||||||||||||||
166
| Millions of Dollars | ||||||||||||||||||||||||||
| Year Ended December 31, 2023 | ||||||||||||||||||||||||||
| Operating Segments | ||||||||||||||||||||||||||
| Midstream | Chemicals | Refining | M&S | Renewable Fuels | Corporate and Other | Consolidating Adjustments | Total Consolidated | |||||||||||||||||||
| Revenues and Other Income | ||||||||||||||||||||||||||
| Third-party sales and other operating revenues | $ | |||||||||||||||||||||||||
| Intercompany revenues | ( | — | ||||||||||||||||||||||||
| Total sales and other operating revenues | ( | |||||||||||||||||||||||||
| Equity in earnings of affiliates | ( | |||||||||||||||||||||||||
| Net gain on dispositions | ( | ( | ( | |||||||||||||||||||||||
| Other income | ( | |||||||||||||||||||||||||
| Total Revenues and Other Income | ( | |||||||||||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||
| Purchased crude oil and products | ( | |||||||||||||||||||||||||
| Operating expenses* | ( | ( | ||||||||||||||||||||||||
| Selling, general and administrative expenses* | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Impairments | ||||||||||||||||||||||||||
| Taxes other than income taxes | ||||||||||||||||||||||||||
| Interest and debt expense | ||||||||||||||||||||||||||
| Other segment items** | ||||||||||||||||||||||||||
| Total Costs and Expenses | ( | ( | ||||||||||||||||||||||||
| Income (loss) before income taxes | $ | ( | ||||||||||||||||||||||||
* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM. | ||||||||||||||||||||||||||
** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.” | ||||||||||||||||||||||||||
| Millions of Dollars | |||||||||||||||||||||||
| As of and for the Year Ended December 31, 2023 | |||||||||||||||||||||||
| Operating Segments | |||||||||||||||||||||||
| Midstream | Chemicals | Refining | M&S | Renewable Fuels | Corporate and Other | Total Consolidated | |||||||||||||||||
| Interest Income | $ | ||||||||||||||||||||||
| Investments In and Advances to Affiliates | |||||||||||||||||||||||
| Total Assets | |||||||||||||||||||||||
| Capital Expenditures and Investments | |||||||||||||||||||||||
167
Geographic Information
Long-lived assets, defined as net PP&E plus investments and long-term receivables, by geographic location at December 31 were:
| Millions of Dollars | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | ||||||||||||||||
| United Kingdom | |||||||||||||||||
| Germany | |||||||||||||||||
| Other countries | |||||||||||||||||
| Worldwide consolidated | $ | ||||||||||||||||
Note 31—New Accounting Standards
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),” which will require additional disclosure of certain costs and expenses within the notes to the consolidated financial statements. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the provisions of ASU 2024-03 and the incremental disclosures that will be required in our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software,” which simplifies the capitalization guidance by removing all references to software development project stages. Under this standard, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. We are evaluating the provisions of ASU 2025-06 on our consolidated financial statements and related disclosures.
168
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934, as amended (the Act), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2025, with the participation of management, our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer carried out an evaluation, pursuant to Rule 13a-15(b) of the Act, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were operating effectively as of December 31, 2025.
There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) of the Act, in the quarterly period ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
This report is included in Item 8 and is incorporated herein by reference.
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
This report is included in Item 8 and is incorporated herein by reference.
Item 9B. OTHER INFORMATION
On November 21, 2025 , Kevin J. Mitchell , Executive Vice President and Chief Financial Officer, adopted a trading plan intended to satisfy Rule 10b5-1(c) under the Act, providing for the sale of up to 48,450 shares of our common stock between February 23, 2026 and January 29, 2027 .
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
169
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our executive officers appears in Part I of this report.
We have adopted a Code of Ethics for the Principal Executive Officer and Senior Financial Officers (the “Code of Ethics”) that applies to our Principal Executive Officer, Chief Financial Officer and Controller. The Code of Ethics is posted on our website located at http://www.phillips66.com (within the Corporate Governance section) and is available in print upon request. We intend to disclose future amendments to the Code of Ethics, and any waivers of the Code of Ethics, on our website within four business days following the date of the amendment or waiver.
The remaining information required by Item 10 of Part III is incorporated herein by reference from our Definitive Proxy Statement relating to our 2026 Annual Meeting of Shareholders, which will be filed within 120 days after December 31, 2025 (the 2026 Definitive Proxy Statement).*
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 of Part III is incorporated herein by reference from our 2026 Definitive Proxy Statement.*
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 of Part III is incorporated herein by reference from our 2026 Definitive Proxy Statement.*
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 of Part III is incorporated herein by reference from our 2026 Definitive Proxy Statement.*
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 of Part III is incorporated herein by reference from our 2026 Definitive Proxy Statement.*
_________________________
* Except for information or data specifically incorporated herein by reference under Items 10 through 14, other information and data appearing in our 2026 Definitive Proxy Statement are not deemed to be a part of this Annual Report or deemed to be filed with the U.S. Securities and Exchange Commission as a part of this report.
170
PART IV
Item 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
| (a) | 1. | Financial Statements and Supplementary Data The financial statements and supplementary information listed in the Index to Financial Statements, which appears on page 91, are filed as part of this Annual Report. | ||||||
| 2. | Financial Statement Schedules All financial statement schedules are omitted because they are not required, not significant, not applicable, or the information is shown in the financial statements or notes thereto. | |||||||
| 3. | Exhibits The exhibits listed in the Index to Exhibits, which appears on pages 172 to 178, are filed as part of this Annual Report. | |||||||
Item 16. FORM 10-K SUMMARY
None.
171
PHILLIPS 66
INDEX TO EXHIBITS
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
2.1 | Separation and Distribution Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012. | 8-K | 2.1 | 05/01/2012 | 001-35349 | |||||||||||||||
2.2 | Agreement and Plan of Merger, dated as of October 26, 2021, by and among Phillips 66, Phillips 66 Company, Phillips 66 Project Development Inc., Phoenix Sub LLC, Phillips 66 Partners LP, and Phillips 66 Partners GP LLC. | 8-K | 2.1 | 10/27/2021 | 001-35349 | |||||||||||||||
2.3 | Agreement and Plan of Merger, dated January 5, 2023, by and among Phillips 66, Phillips 66 Project Development Inc., Dynamo Merger Sub LLC, DCP Midstream, LP, DCP Midstream GP, LP and DCP Midstream GP, LLC. | 8-K | 2.1 | 01/06/2023 | 001-35349 | |||||||||||||||
3.1 | Amended and Restated Certificate of Incorporation of Phillips 66. | 8-K | 3.1 | 05/01/2012 | 001-35349 | |||||||||||||||
3.2 | Amended and Restated By-Laws of Phillips 66. | 8-K | 3.1 | 12/09/2022 | 001-35349 | |||||||||||||||
4.1 | Description of Phillips 66’s Securities. | 10-K | 4.1 | 02/21/2020 | 001-35349 | |||||||||||||||
4.2 | Indenture, dated as of March 12, 2012, among Phillips 66, as issuer, Phillips 66 Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee, in respect of senior debt securities of Phillips 66. | 10-12B/A | 4.3 | 04/05/2012 | 001-35349 | |||||||||||||||
4.3 | Form of the terms of 5.875% Senior Notes due 2042. | 10-12B/A | 4.4 | 04/05/2012 | 001-35349 | |||||||||||||||
4.4 | Form of the terms of 4.650% Senior Notes due November 2034. | 8-K | 4.2 | 11/17/2014 | 001-35349 | |||||||||||||||
4.5 | Form of the terms of 4.875% Senior Notes due November 2044. | 8-K | 4.2 | 11/17/2014 | 001-35349 | |||||||||||||||
4.6 | Form of the terms of 3.900% Senior Notes due March 2028. | 8-K | 4.3 | 03/01/2018 | 001-35349 | |||||||||||||||
4.7 | Indenture, dated as of April 9, 2020, among Phillips 66, as issuer, Phillips 66 Company, as guarantor, and U.S. Bank National Association, as trustee, in respect of senior debt securities of Phillips 66. | 8-K | 4.1 | 04/09/2020 | 001-35349 | |||||||||||||||
4.8 | Form of the terms of 2.150% Senior Notes due 2030. | 8-K | 4.3 | 06/10/2020 | 001-35349 | |||||||||||||||
4.9 | Form of the terms of 1.300% Senior Notes due 2026. | 8-K | 4.4 | 11/18/2020 | 001-35349 | |||||||||||||||
4.10 | Form of the terms of 3.300% Senior Notes due 2052. | 8-K | 4.2 | 11/15/2021 | 001-35349 | |||||||||||||||
4.11 | Indenture, dated as of May 5, 2022, among Phillips 66 Company, as issuer, Phillips 66, as guarantor, and U.S. Bank Trust Company, National Association, as trustee, in respect of senior debt securities of Phillips 66 Company. | 8-K | 4.1 | 05/05/2022 | 001-35349 | |||||||||||||||
172
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
4.12 | Form of the terms of the 2026 Notes, including the form of the 2026 Note. | 8-K | 4.4 | 05/05/2022 | 001-35349 | |||||||||||||||
4.13 | Form of the terms of the 2028 Notes, including the form of the 2028 Note. | 8-K | 4.5 | 05/05/2022 | 001-35349 | |||||||||||||||
4.14 | Form of the terms of the 2029 Notes, including the form of the 2029 Note. | 8-K | 4.6 | 05/05/2022 | 001-35349 | |||||||||||||||
4.15 | Form of the terms of the 2045 Notes, including the form of the 2045 Note. | 8-K | 4.7 | 05/05/2022 | 001-35349 | |||||||||||||||
4.16 | Form of the terms of the 2046 Notes, including the form of the 2046 Note. | 8-K | 4.8 | 05/05/2022 | 001-35349 | |||||||||||||||
4.17 | Form of the terms of the 2027 Notes, including the form of the 2027 Note. | 8-K | 4.2 | 03/29/2023 | 001-35349 | |||||||||||||||
4.18 | Form of the terms of the 2033 Notes, including the form of the 2033 Note. | 8-K | 4.3 | 03/29/2023 | 001-35349 | |||||||||||||||
4.19 | Form of the terms of the 2031 Notes, including the form of the 2031 Note. | 8-K | 4.2 | 02/28/2024 | 001-35349 | |||||||||||||||
4.20 | Form of the terms of the 2054 Notes, including the form of the 2054 Note. | 8-K | 4.4 | 02/28/2024 | 001-35349 | |||||||||||||||
4.21 | Form of the terms of the 2035 Notes, including the form of the 2035 Note. | 8-K | 4.3 | 09/11/2024 | 001-35349 | |||||||||||||||
4.22 | Form of the terms of the 2055 Notes, including the form of the 2055 Note. | 8-K | 4.4 | 09/11/2024 | 001-35349 | |||||||||||||||
4.23 | Registration Rights Agreement, dated as of May 5, 2022, among Phillips 66 Company, as issuer, Phillips 66, as guarantor, and Barclays Capital Inc., J.P. Morgan Securities LLC and RBC Capital Markets, LLC, as dealer managers. | 8-K | 4.9 | 05/05/2022 | 001-35349 | |||||||||||||||
4.24 | Indenture dated as of September 30, 2010 for the issuance of debt securities between DCP Midstream Operating, LP, as issuer, any Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee. | 8-K | 4.1 | 09/30/2010 | 001-32678 | |||||||||||||||
4.25 | Third Supplemental Indenture dated as of June 14, 2012 to Indenture dated as of September 30, 2010 between DCP Midstream Operating, LP, as issuer, DCP Midstream Partners, LP, as guarantor, and the Bank of New York Mellon Trust Company, N.A., as trustee. | 8-K | 4.1 | 06/14/2012 | 001-32678 | |||||||||||||||
4.26 | Sixth Supplemental Indenture dated as of March 13, 2014 to Indenture dated as of September 30, 2010 between DCP Midstream Operating, LP, as issuer, DCP Midstream Partners, LP, as guarantor, and the Bank of New York Mellon Trust Company, N.A., as trustee. | 8-K | 4.3 | 03/14/2014 | 001-32678 | |||||||||||||||
173
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
4.27 | Eighth Supplemental Indenture dated as of May 10, 2019 to Indenture dated as of September 30, 2010 between DCP Midstream Operating, LP, as issuer, DCP Midstream, LP, as guarantor, and the Bank of New York Mellon Trust Company, N.A., as trustee. | 8-K | 4.3 | 05/10/2019 | 001-32678 | |||||||||||||||
4.28 | Ninth Supplemental Indenture dated as of June 24, 2020 to Indenture dated as of September 30, 2010 between DCP Midstream Operating, LP, as issuer, DCP Midstream, LP, as guarantor, and the Bank of New York Mellon Trust Company, N.A., as trustee. | 8-K | 4.3 | 06/24/2020 | 001-32678 | |||||||||||||||
4.29 | Tenth Supplemental Indenture dated as of November 19, 2021 to Indenture dated as of September 30, 2010 between DCP Midstream Operating, LP, as issuer, DCP Midstream, LP, as guarantor, and the Bank of New York Mellon Trust Company, N.A., as trustee. | 8-K | 4.3 | 11/19/2021 | 001-32678 | |||||||||||||||
4.30* | Eleventh Supplemental Indenture dated as of June 20, 2023 to Indenture dated as of September 30, 2010 between DCP Midstream Operating, LP, as issuer, DCP Midstream, LP, as guarantor, and the Bank of New York Mellon Trust Company, N.A., as trustee. | |||||||||||||||||||
4.31 | Indenture, dated as of August 16, 2000, by and between Duke Energy Field Services, LLC and The Chase Manhattan Bank. | 8-K | 4.1 | 01/06/2017 | 001-32678 | |||||||||||||||
4.32 | First Supplemental Indenture, dated August 16, 2000, by and between Duke Energy Field Services, LLC and The Chase Manhattan Bank. | 8-K | 4.1 | 08/16/2000 | 000-31095 | |||||||||||||||
4.33 | Fifth Supplemental Indenture, dated as of October 27, 2006, by and between Duke Energy Field Services, LLC and The Bank of New York (as successor to JPMorgan Chase Bank, N.A., formerly known as The Chase Manhattan Bank). | 8-K | 4.3 | 01/06/2017 | 001-32678 | |||||||||||||||
4.34 | Sixth Supplemental Indenture, dated September 17, 2007, by and between DCP Midstream, LLC (formerly known as Duke Energy Field Services, LLC) and The Bank of New York (as successor to JPMorgan Chase Bank, N.A., formerly known as The Chase Manhattan Bank). | 8-K | 4.4 | 01/06/2017 | 001-32678 | |||||||||||||||
4.35 | Eleventh Supplemental Indenture, dated January 1, 2017, by and between DCP Midstream Operating, LP, DCP Midstream, LLC and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, as successor to JPMorgan Chase Bank, N.A., formerly known as The Chase Manhattan Bank). | 8-K | 4.8 | 01/06/2017 | 001-32678 | |||||||||||||||
4.36 | Twelfth Supplemental Indenture, dated January 1, 2017, by and among DCP Midstream Operating, LP (as successor to DCP Midstream, LLC (formerly known as Duke Energy Field Services, LLC)), DCP Midstream Partners, LP and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Mellon, as successor to JPMorgan Chase Bank, N.A., formerly known as The Chase Manhattan Bank). | 8-K | 4.9 | 01/06/2017 | 001-32678 | |||||||||||||||
174
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
4.37 | Indenture, dated as of May 21, 2013, by and between DCP Midstream Operating, LP (as issuer and successor to DCP Midstream, LLC) and the Bank of New York Mellon Trust Company, N.A. | 8-K | 4.10 | 01/06/2017 | 001-32678 | |||||||||||||||
4.38 | First Supplemental Indenture, dated May 21, 2013, by and between DCP Midstream, LLC and the Bank of New York Mellon Trust Company, N.A. | 8-K | 4.11 | 01/06/2017 | 001-32678 | |||||||||||||||
4.39 | Second Supplemental Indenture, dated January 1, 2017, by and between DCP Midstream Operating, LP, DCP Midstream, LLC and The Bank of New York Mellon Trust Company, N.A. | 8-K | 4.12 | 01/06/2017 | 001-32678 | |||||||||||||||
4.40 | Subordinated Indenture, dated as of September 18, 2025, among Phillips 66 Company, as issuer, Phillips 66, as guarantor, and U.S. Bank Trust Company, National Association, as trustee, in respect of subordinated debt securities of Phillips 66 Company. | 8-K | 4.1 | 09/18/2025 | 001-35349 | |||||||||||||||
4.41 | Form of the terms of the 5.875% Series A Junior Subordinated Notes due 2056, including the form of the 5.875% Series A Junior Subordinated Notes due 2056. | 8-K | 4.2 | 09/18/2025 | 001-35349 | |||||||||||||||
4.42 | Form of the terms of the 6.200% Series B Junior Subordinated Notes due 2056, including the form of the 6.200% Series B Junior Subordinated Notes due 2056. | 8-K | 4.3 | 09/18/2025 | 001-35349 | |||||||||||||||
10.1 | Credit Agreement dated as of February 28, 2024, among Phillips 66 Company, Phillips 66, as guarantor, the lenders party thereto, and Mizuho Bank, Ltd., as administrative agent. | 8-K | 10.1 | 02/28/2024 | 001-35349 | |||||||||||||||
10.2 | Receivables Purchase and Financing Agreement, dated as of September 30, 2024, among Phillips 66 Receivables LLC, the persons from time to time party thereto as purchaser/lenders, PNC Bank, National Association, as Administrative Agent, Phillips 66 Company, as servicer, and PNC Capital Markets LLC, as structuring agent. | 8-K | 10.1 | 10/01/2024 | 001-35349 | |||||||||||||||
10.3 | Sale and Contribution Agreement, dated as of September 30, 2024, between Phillips 66 Company, as an originator, and Phillips 66 Receivables LLC, as buyer. | 8-K | 10.2 | 10/01/2024 | 001-35349 | |||||||||||||||
10.4 | Third Amended and Restated Limited Liability Company Agreement of Chevron Phillips Chemical Company LLC, effective as of May 1, 2012. | 10-Q | 10.14 | 08/03/2012 | 001-35349 | |||||||||||||||
10.5 | First Amendment to Third Amended and Restated Limited Liability Company Agreement of Chevron Phillips Chemical Company LLC, effective as of December 31, 2017. | 10-K | 10.6 | 02/23/2018 | 001-35349 | |||||||||||||||
10.6 | Second Amendment to Third Amended and Restated Limited Liability Company Agreement of Chevron Phillips Chemical Company LLC, effective as of June 1, 2018. | 10-Q | 10.1 | 07/27/2018 | 001-35349 | |||||||||||||||
175
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
10.7 | Third Amendment to the Third Amended and Restated Limited Liability Company Agreement of Chevron Phillips Chemical Company LLC. | 10-Q | 10.1 | 04/30/2021 | 001-35349 | |||||||||||||||
10.8 | Indemnification and Release Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012. | 8-K | 10.1 | 05/01/2012 | 001-35349 | |||||||||||||||
10.9 | Intellectual Property Assignment and License Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012. | 8-K | 10.2 | 05/01/2012 | 001-35349 | |||||||||||||||
10.10 | Employee Matters Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012. | 8-K | 10.4 | 05/01/2012 | 001-35349 | |||||||||||||||
10.11 | Amendment to the Employee Matters Agreement by and between ConocoPhillips and Phillips 66, dated April 26, 2012. | 10-Q | 10.1 | 05/02/2013 | 001-35349 | |||||||||||||||
10.12 | Transition Services Agreement between ConocoPhillips and Phillips 66, dated April 26, 2012. | 8-K | 10.5 | 05/01/2012 | 001-35349 | |||||||||||||||
10.13 | 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | DEF14A | App. A | 03/27/2013 | 001-35349 | |||||||||||||||
10.14 | 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | DEF14A | App. A | 03/31/2022 | 001-35349 | |||||||||||||||
10.15 | Phillips 66 Key Employee Supplemental Retirement Plan.** | 10-Q | 10.15 | 08/03/2012 | 001-35349 | |||||||||||||||
10.16 | Phillips 66 Amended and Restated Executive Severance Plan.** | 10-Q | 10.1 | 07/29/2016 | 001-35349 | |||||||||||||||
10.17 | Phillips 66 Deferred Compensation Plan for Non-Employee Directors.** | 10-Q | 10.17 | 08/03/2012 | 001-35349 | |||||||||||||||
10.18 | Phillips 66 Key Employee Deferred Compensation Plan-Title I.** | 10-Q | 10.18 | 08/03/2012 | 001-35349 | |||||||||||||||
10.19 | Phillips 66 Key Employee Deferred Compensation Plan-Title II.** | 10-Q | 10.19 | 08/03/2012 | 001-35349 | |||||||||||||||
10.20 | First Amendment to the Phillips 66 Key Employee Deferred Compensation Plan Title II.** | 10-K | 10.24 | 02/22/2013 | 001-35349 | |||||||||||||||
10.21 | Phillips 66 Defined Contribution Make-Up Plan Title I.** | 10-Q | 10.20 | 08/03/2012 | 001-35349 | |||||||||||||||
10.22 | Phillips 66 Defined Contribution Make-Up Plan Title II.** | 10-K | 10.26 | 02/22/2013 | 001-35349 | |||||||||||||||
10.23 | Phillips 66 Key Employee Change in Control Severance Plan.** | 10-K | 10.27 | 02/22/2013 | 001-35349 | |||||||||||||||
10.24 | First Amendment to Phillips 66 Key Employee Change in Control Severance Plan, Effective October 2, 2015.** | 8-K | 10.1 | 11/08/2013 | 001-35349 | |||||||||||||||
10.25 | Annex to the Phillips 66 Nonqualified Deferred Compensation Arrangements.** | 10-Q | 10.23 | 08/03/2012 | 001-35349 | |||||||||||||||
176
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
10.26 | Form of Stock Option Award Agreement under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | 10-K | 10.31 | 02/21/2020 | 001-35349 | |||||||||||||||
10.27 | Form of Restricted Stock or Restricted Stock Unit Award Agreement under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | 10-K | 10.32 | 02/21/2020 | 001-35349 | |||||||||||||||
10.28 | Form of Performance Share Unit Award Agreement under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | 10-K | 10.33 | 02/21/2020 | 001-35349 | |||||||||||||||
10.29 | Form of Stock Option Award Agreement under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | 10-Q | 10.2 | 05/04/2023 | 001-35349 | |||||||||||||||
10.30* | Form of Restricted Stock or Restricted Stock Unit Award Agreement under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | |||||||||||||||||||
10.31* | Form of Performance Share Unit Award Agreement under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.** | |||||||||||||||||||
10.32 | Letter Agreement with Vanessa L. Allen Sutherland, dated October 9, 2021.** | 10-Q | 10.5 | 05/04/2023 | 001-35349 | |||||||||||||||
10.33 | Fifth Amendment to Receivables Financing Agreement, dated July 29, 2022, among DCP Receivables LLC, as borrower, DCP Midstream, LP, as initial servicer, the lenders, LC participants and group agents that are parties thereto from time to time, PNC Bank, National Association, as Administrative Agent and LC Bank, and PNC Capital Markets LLC, as Structuring Agent. | 10-Q | 10.1 | 11/03/2022 | 001-32678 | |||||||||||||||
10.34 | Phillips 66 Key Employee Supplemental Retirement Plan Amendment and Restatement.** | 10-K | 10.35 | 02/21/2024 | 001-32678 | |||||||||||||||
10.35 | Phillips 66 Defined Contribution Make-Up Plan (Title II) Amendment and Restatement.** | 10-K | 10.36 | 02/21/2024 | 001-32678 | |||||||||||||||
10.36 | Second Amendment to the Phillips 66 Key Employee Deferred Compensation Plan Title II.** | 10-K | 10.37 | 02/21/2024 | 001-32678 | |||||||||||||||
10.37 | The DCP Executive Nonqualified Excess Plan Plan Document.** | 10-K | 10.38 | 02/21/2024 | 001-32678 | |||||||||||||||
10.38 | Third Amendment to Receivables Purchase and Financing Agreement, dated as of September 29, 2025, among Phillips 66 Receivables LLC, the persons from time to time party thereto as Purchaser/Lenders, PNC Bank, National Association, as Administrative Agent, Phillips 66 Company, as servicer, and PNC Capital Markets LLC, as structuring agent. | 8-K | 10.1 | 09/30/2025 | 001-35349 | |||||||||||||||
10.39 | First Amendment to the Phillips 66 Key Employee Supplemental Retirement Plan** | 10-Q | 10.2 | 10/29/2025 | 001-35349 | |||||||||||||||
19* | ||||||||||||||||||||
177
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |||||||||||||||
21* | List of Subsidiaries of Phillips 66. | |||||||||||||||||||
22* | List of Guarantor Subsidiaries. | |||||||||||||||||||
23.1* | Consent of Ernst & Young LLP, independent registered public accounting firm. | |||||||||||||||||||
23.2* | Consent of Deloitte & Touche LLP, independent registered public accounting firm. | |||||||||||||||||||
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |||||||||||||||||||
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |||||||||||||||||||
32*** | Certifications pursuant to 18 U.S.C. Section 1350. | |||||||||||||||||||
97 | Phillips 66 Clawback Policy. | 10-K | 97 | 02/21/2024 | 001-32678 | |||||||||||||||
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||
| 101.SCH* | Inline XBRL Schema Document. | |||||||||||||||||||
| 101.CAL* | Inline XBRL Calculation Linkbase Document. | |||||||||||||||||||
| 101.LAB* | Inline XBRL Labels Linkbase Document. | |||||||||||||||||||
| 101.PRE* | Inline XBRL Presentation Linkbase Document. | |||||||||||||||||||
| 101.DEF* | Inline XBRL Definition Linkbase Document. | |||||||||||||||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||||||||||||
* Filed herewith.
** Management contracts and compensatory plans or arrangements.
*** Furnished herewith.
178
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PHILLIPS 66 | ||||||||
| Date: | February 20, 2026 | /s/ Mark E. Lashier | ||||||
Mark E. Lashier Chairman and Chief Executive Officer | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, as of February 20, 2026, by the following persons on behalf of the registrant and in the capacities indicated.
| Signature | Title | |||||||
| /s/ Mark E. Lashier | Chairman and Chief Executive Officer | |||||||
| Mark E. Lashier | (Principal executive officer) | |||||||
/s/ Kevin J. Mitchell | Executive Vice President and Chief Financial Officer | |||||||
Kevin J. Mitchell | (Principal financial officer) | |||||||
| /s/ Ann M. Kluppel | Senior Vice President and Controller | |||||||
| Ann M. Kluppel | (Principal accounting officer) | |||||||
179
| /s/ Julie L. Bushman | Director | |||||||
| Julie L. Bushman | ||||||||
| /s/ Sigmund L. Cornelius | Director | |||||||
| Sigmund L. Cornelius | ||||||||
| /s/ Lisa A. Davis | Director | |||||||
| Lisa A. Davis | ||||||||
| /s/ Gregory J. Hayes | Director | |||||||
| Gregory J. Hayes | ||||||||
| /s/ A. Nigel Hearne | Director | |||||||
A. Nigel Hearne | ||||||||
| /s/ Michael A. Heim | Director | |||||||
| Michael A. Heim | ||||||||
| /s/ Charles M. Holley | Director | |||||||
| Charles M. Holley | ||||||||
| /s/ Robert W. Pease | Director | |||||||
| Robert W. Pease | ||||||||
| /s/ Grace Puma | Director | |||||||
| Grace Puma | ||||||||
| /s/ Denise R. Singleton | Director | |||||||
| Denise R. Singleton | ||||||||
| /s/ Douglas T. Terreson | Director | |||||||
| Douglas T. Terreson | ||||||||
| /s/ Glenn F. Tilton | Director | |||||||
| Glenn F. Tilton | ||||||||
| /s/ Marna C. Whittington | Director | |||||||
| Marna C. Whittington | ||||||||
180
FAQ
What are the main business segments of Phillips 66 (PSX) in the 2025 annual report?
Phillips 66 operates five main segments: Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels. Midstream covers pipelines and NGL; Chemicals is via CPChem; Refining runs 10 refineries; Marketing sells fuels and lubricants; Renewable Fuels focuses on Rodeo and Humber.
What major acquisitions and divestitures did Phillips 66 (PSX) complete in 2025?
In 2025, Phillips 66 acquired the Coastal Bend NGL assets and, on October 1, the remaining 50% interest in WRB Refining. It divested a 25% stake in Gulf Coast Express Pipeline, sold its 49% interest in Coop Mineraloel AG, and reduced its Germany/Austria retail stake to 35%.
How is Phillips 66 (PSX) expanding its renewable fuels and SAF business?
Phillips 66’s Rodeo Renewable Energy Complex can process about 50,000 B/D of renewable feedstocks into renewable diesel and jet fuel. In November 2025, it agreed to supply approximately 83 million gallons of sustainable aviation fuel over three years, targeting substantial life‑cycle greenhouse gas emission reductions versus conventional jet fuel.
What key midstream and NGL capabilities does Phillips 66 (PSX) highlight?
The company reports ownership or interests in roughly 70,000 miles of pipelines and extensive terminals. Its Sweeny Hub has demonstrated NGL fractionation capacity of 675,000 B/D and LPG export capacity of 300,000 B/D, supported by major mixed and purity NGL pipelines, including Sand Hills and Southern Hills.
What changes did Phillips 66 (PSX) make to its refining portfolio in 2025?
Phillips 66 began idling its Los Angeles Refinery in the fourth quarter of 2025 and plans site redevelopment. It also acquired the remaining 50% of WRB Refining, gaining full ownership of the Wood River and Borger refineries, and continues to operate nine other refineries across the U.S. and Europe.
What key risks to Phillips 66 (PSX) does the 2025 annual report discuss?
The report highlights risks from commodity margin volatility, dependence on third‑party transportation, operational hazards, climate change and severe weather, evolving environmental and climate regulation, including California’s SBx 1‑2, political and economic developments, legal proceedings, competition, and challenges executing large capital and energy‑transition projects.
Phillips 66
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