Non-Mineral Leases

12 Months Ended

Dec. 31, 2025

Note 13—Non-Mineral Leases

The company primarily leases office buildings and drilling equipment, as well as ocean transport vessels, tugboats, corporate aircraft, and other facilities and equipment. Certain leases include escalation clauses for adjusting rental payments to reflect changes in price indices, and other leases include payment provisions that vary based on the nature of usage of the leased asset. Additionally, the company has executed certain leases that provide it with the option to extend or renew the term of the lease, terminate the lease prior to the end of the lease term, or purchase the leased asset as of the end of the lease term. In other cases, the company has executed lease agreements that require it to guarantee the residual value of certain leased office buildings. For additional information about guarantees, see Note 8.

For those leasing arrangements where the underlying asset is not yet constructed, the company does not control the asset during construction. There are no significant restrictions imposed on us by the lease agreements with regard to dividends, asset dispositions or borrowing ability.

We determine if an arrangement is or contains a lease at contract inception. Certain contractual arrangements may contain both lease and non-lease components. Only the lease components of these contractual arrangements are subject to the provisions of ASC Topic 842, “Leases,” and any non-lease components are subject to other applicable accounting guidance; however, we have elected to adopt the optional practical expedient not to separate lease components apart from non-lease components for existing asset classes, except for crude oil and LNG Vessels. For contractual arrangements involving a new leased asset class, we determine at contract inception whether it will apply the optional practical expedient to the new leased asset class.

Leases are evaluated for classification as operating or finance leases at the commencement date of the lease and right-of-use assets and corresponding liabilities are recognized on our consolidated balance sheet based on the present value of future lease payments relating to the use of the underlying asset during the lease term. Future lease payments include variable lease payments that depend upon an index or rate using the index or rate at the commencement date and probable amounts owed under residual value guarantees. The amount of future lease payments may be increased to include additional payments related to lease extension, termination, and/or purchase options when the company has determined, at or subsequent to lease commencement, generally due to limited asset availability or operating commitments, it is reasonably certain of exercising such options. We use our incremental borrowing rate as the discount rate in determining the present value of future lease payments, unless the interest rate implicit in the lease arrangement is readily determinable. Lease payments that vary subsequent to the commencement date based on future usage levels, the nature of leased asset activities, or certain other contingencies are not included in the measurement of lease right-of-use assets and corresponding liabilities. We have elected not to record assets and liabilities on our consolidated balance sheet for lease arrangements with terms of 12 months or less.

We often enter into leasing arrangements acting in the capacity as operator for and/or on behalf of certain oil and gas joint ventures of undivided interests. If the lease arrangement can be legally enforced only against us as operator and there is no separate arrangement to sublease the underlying leased asset to our coventurers, we recognize at lease commencement a right-of-use asset and corresponding lease liability on our consolidated balance sheet on a gross basis. While we record lease costs on a gross basis in our consolidated income statement and statement of cash flows, such costs are offset by the reimbursement we receive from our coventurers for their share of the lease cost as the underlying leased asset is utilized in joint venture activities. As a result, lease cost is presented in our consolidated income statement and statement of cash flows on a proportional basis. If we are a nonoperating coventurer, we recognize a right-of-use asset and corresponding lease liability only if we were a specified contractual party to the lease arrangement and the arrangement could be legally enforced against us. In this circumstance, we would recognize both the right-of-use asset and corresponding lease liability on our consolidated balance sheet on a proportional basis consistent with our undivided interest ownership in the related joint venture.

The company has historically recorded finance lease assets and liabilities associated with certain oil and gas joint ventures on a proportional basis pursuant to accounting guidance applicable prior to the adoption date of ASC Topic 842. In accordance with the transition provisions of ASC Topic 842, and since we have elected to adopt the package of optional transition-related practical expedients, the historical accounting treatment for these leases has been carried forward and is subject to reconsideration upon the modification or other required reassessment of the arrangements prior to lease term expiration.

The following table summarizes the right-of-use assets and lease liabilities for both the operating and finance leases on our consolidated balance sheet as of December 31:


	Millions of Dollars
	2025			2024
	Operating Leases		Finance Leases	Operating Leases	Finance Leases
Right-of-Use Assets
Properties, plants and equipment
Gross			2,007		1,983
Accumulated DD&A			(1,507)		(1,336)
Net PP&E*			500		647

Other assets	950			1,017

Lease Liabilities
Short-term debt**			306		292
Other accruals	383			329
Long-term debt***			495		648
Other liabilities and deferred credits	567			695
Total lease liabilities	$	950	801	1,024	940

* Includes proportionately consolidated finance lease assets of $83 million at December 31, 2025 and $107 million at December 31, 2024.

** Includes proportionately consolidated finance lease liabilities of $188 million at December 31, 2025 and $181 million at December 31, 2024.

*** Includes proportionately consolidated finance lease liabilities of $192 million at December 31, 2025 and $259 million at December 31, 2024.

The following table summarizes our lease costs:


	Millions of Dollars
	2025		2024	2023
Lease Cost*
Operating lease cost	$	447	325	229
Finance lease cost
Amortization of right-of-use assets	171		173	180
Interest on lease liabilities	24		29	35
Short-term lease cost**	65		49	40
Total lease cost***	$	707	576	484

* The amounts presented in the table above have not been adjusted to reflect amounts recovered or reimbursed from oil and gas coventurers.

** Short-term leases are not recorded on our consolidated balance sheet.

*** Variable lease cost and sublease income are immaterial for the periods presented and therefore are not included in the table above.

The following table summarizes the lease terms and discount rates as of December 31:


Lease Term and Discount Rate	2025	2024

Weighted-average term (years)
Operating leases	4.06	4.41
Finance leases	4.18	4.86

Weighted-average discount rate (percent)
Operating leases	4.58	4.62
Finance leases	3.47	3.40

The following table summarizes other lease information:


	Millions of Dollars
	2025		2024	2023
Other Information*
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	385	248	173
Operating cash flows from finance leases	24		29	33
Financing cash flows from finance leases	175		172	169

Right-of-use assets obtained in exchange for operating lease liabilities	$	320	628	355
Right-of-use assets obtained in exchange for finance lease liabilities	25		—	9

*The amounts presented in the table above have not been adjusted to reflect amounts recovered or reimbursed from oil and gas coventurers. In addition, pursuant to other applicable accounting guidance, lease payments made in connection with preparing another asset for its intended use are reported in the "Cash flows from investing activities" section of our consolidated statement of cash flows.

The following table summarizes future lease payments for operating and finance leases at December 31, 2025:


	Millions of Dollars
	Operating Leases		Finance Leases
Maturity of Lease Liabilities
2026	$	417	363
2027	219		164
2028	143		181
2029	102		91
2030	55		57
Remaining years	109		48
Total	1,045		904
Less: portion representing imputed interest	(95)		(103)
Total lease liabilities	$	950	801

As of December 31, 2025 and December 31, 2024, the company had approximately $1 billion and nil in future undiscounted cash flows for leases not yet commenced related to time-chartered LNG vessels in support of future LNG offtake, respectively.