Financial Instruments and Derivatives

The estimated fair value of financial instruments and derivatives at March 31, 2026 and December 31, 2025, and the related

hierarchy level for the fair value measurement was as follows:


	March 31, 2026

(millions of dollars)	Fair Value
(millions of dollars)	Level 1	Level 2	Level 3	Total Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value
Assets
Derivative assets (1)	42,237	8,357	—	50,594	(47,389)	(281)	—	2,924
Advances to/receivables from equity companies (2)(3)	—	1,369	4,134	5,503	—	—	226	5,729
Other long-term financial assets (4)	1,552	—	1,788	3,340	—	—	228	3,568

Liabilities
Derivative liabilities (5)	44,879	8,430	—	53,309	(47,389)	(2,912)	—	3,008
Long-term debt (6)	23,269	4,108	—	27,377	—	—	3,382	30,759
Long-term obligations to equity companies (3)	—	—	562	562	—	—	—	562
Other long-term financial liabilities (7)	—	—	352	352	—	—	13	365


	December 31, 2025

(millions of dollars)	Fair Value
(millions of dollars)	Level 1	Level 2	Level 3	Total Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value
Assets
Derivative assets (1)	5,197	2,259	—	7,456	(6,261)	(341)	—	854
Advances to/receivables from equity companies (2)(3)	—	1,935	3,938	5,873	—	—	256	6,129
Other long-term financial assets (4)	1,536	—	1,800	3,336	—	—	216	3,552

Liabilities
Derivative liabilities (5)	4,994	2,043	—	7,037	(6,261)	(141)	—	635
Long-term debt (6)	24,678	3,909	—	28,587	—	—	3,248	31,835
Long-term obligations to equity companies (3)	—	—	542	542	—	—	—	542
Other long-term financial liabilities (7)	—	—	348	348	—	—	16	364

(1) Included in the Balance Sheet lines: Notes and accounts receivable - net and Other assets, including intangibles - net.
(2) Included in the Balance Sheet line: Investments, advances and long-term receivables.
(3) Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs. The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the equity company.
(4) Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles - net.
(5) Included in the Balance Sheet lines: Accounts payable and accrued liabilities and Other long-term obligations.
(6) Excluding finance lease obligations.
(7) Included in the Balance Sheet line: Other long-term obligations. Includes contingent consideration related to a prior year acquisition where fair value is based on expected drilling activities and discount rates.

At March 31, 2026 and December 31, 2025, respectively, the Corporation had $1.9 billion and $0.5 billion of collateral under

master netting arrangements not offset against the derivatives on the Condensed Consolidated Balance Sheet, primarily related

to initial margin requirements.

The Corporation may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its

net investments in certain foreign subsidiaries. Under this method, the change in the carrying value of the financial instruments

due to foreign exchange fluctuations is reported in accumulated other comprehensive income. As of March 31, 2026, the

Corporation has designated $3.4 billion of its Euro-denominated debt and related accrued interest as a net investment hedge of

its European business. The net investment hedge is deemed to be perfectly effective.

The Corporation had undrawn short-term committed lines of credit of $7.3 billion and undrawn long-term committed lines of

credit of $0.3 billion as of the end of first quarter 2026.

Derivative Instruments

The Corporation’s size, strong capital structure, geographic diversity, and the complementary nature of its business segments

reduce the Corporation’s enterprise-wide risk from changes in commodity prices, currency rates, and interest rates. In addition,

the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and to generate returns

from trading. Commodity contracts held for trading purposes are presented in the Condensed Consolidated Statement of Income

on a net basis in the line “Sales and other operating revenue" and in the Consolidated Statement of Cash Flows in “Cash Flows

from Operating Activities” and included before-tax realized and unrealized losses of $3.8 billion and gains of $19 million for

the periods ended March 31, 2026 and 2025, respectively. The Corporation’s commodity derivatives are not accounted for

under hedge accounting. At times, the Corporation also enters into currency and interest rate derivatives, none of which are

material to the Corporation’s financial position as of March 31, 2026 and December 31, 2025, or results of operations for the

periods ended March 31, 2026 and 2025.

The Corporation operates a program to hedge certain of its fixed-rate debt instruments against changes in fair value due to

changes in the designated benchmark interest rate. This program utilizes fair value hedge accounting. The derivative (hedging)

instruments are fixed-for-floating interest rate swaps, with settlement dates that correspond to the interest payments associated

with the fixed-rate debt (hedged item). Changes in the fair values of the hedging instruments are perfectly offset by changes in

the fair values of the hedged items; the effects of these changes in fair values are recorded in "Interest expense" in the

Consolidated Statement of Income. This program was not material to the Consolidated Financial Statements as of the end of

Credit risk associated with the Corporation’s derivative position is mitigated by several factors, including the use of derivative

clearing exchanges and the quality of and financial limits placed on derivative counterparties. The Corporation maintains a

system of controls that includes the authorization, reporting, and monitoring of derivative activity.

The net notional long/(short) position of derivative instruments at March 31, 2026 and December 31, 2025, was as follows:


(millions)	March 31, 2026	December 31, 2025
Crude oil (barrels)	25	6
Petroleum products (barrels)	(47)	(27)
Natural gas (MMBTUs)	(658)	(449)