Derivative and Financial Instruments	12 Months Ended
Dec. 31, 2019
Derivative and Financial Instruments [Abstract]
Derivative and Financial Instruments	Note 14—Derivative and Financial Instruments We use futures, forwards, swaps and options in various markets to meet our customer needs and capture market opportunities. Our commodity business primarily consists of natural gas, crude oil, bitumen, LNG and NGLs. Our derivative instruments are held at fair value on our consolidated balance sheet. Where these balances have the right of setoff, they are presented on a net basis. Related cash flows are recorded as operating activities on our consolidated statement of cash flows. On our consolidated income statement, realized and unrealized gains and losses are recognized either on a gross basis if directly related to our physical business or a net basis if held for trading. Gains and losses related to contracts that meet and are designated with the NPNS exception are recognized upon settlement. We generally apply this exception to eligible crude contracts. We do not use hedge accounting for our commodity derivatives. The following table presents the gross fair values of our commodity derivatives, excluding collateral, and the line items where they appear on our consolidated balance sheet: Millions of Dollars 2019 2018 Assets Prepaid expenses and other current assets $ 288 410 Other assets 34 40 Liabilities Other accruals 283 370 Other liabilities and deferred credits 28 30 The gains (losses) from commodity derivatives incurred, and the line items where they appear on our consolidated income statement were: Millions of Dollars 2019 2018 2017 Sales and other operating revenues $ 141 45 77 Other income 4 7 - Purchased commodities (118) (41) (61) The table below summarizes our material net exposures resulting from outstanding commodity derivative contracts: Open Position Long/(Short) 2019 2018 Commodity Natural gas and power (billions of cubic feet equivalent) Fixed price (5) (17) Basis (23) (1) Foreign Currency Exchange Derivatives We have foreign currency exchange rate risk resulting from international operations. Our foreign currency exchange derivative activity primarily relates to managing our cash-related foreign currency exchange rate exposures, such as firm commitments for capital programs or local currency tax payments, dividends and cash returns from net investments in foreign affiliates, and investments in equity securities. We do not elect hedge accounting on our foreign currency exchange derivatives. The following table presents the gross fair values of our foreign currency exchange derivatives, excluding collateral, and the line items where they appear on our consolidated balance sheet: Millions of Dollars 2019 2018 Assets Prepaid expenses and other current assets $ 1 7 Liabilities Other accruals 20 6 Other liabilities and deferred credits 8 - The losses from foreign currency exchange derivatives incurred and the line item where they appear on our consolidated income statement were: Millions of Dollars 2019 2018 2017 Foreign currency transaction losses $ 16 1 13 We had the following net notional position of outstanding foreign currency exchange derivatives: In Millions Notional Currency 2019 2018 Foreign Currency Exchange Derivatives Sell U.S. dollar, buy British pound USD - 805 Sell British pound, buy other currencies* GBP - 21 Buy British pound, sell euro GBP 4 - Sell Canadian dollar, buy U.S. dollar CAD 1,337 1,242 *Primarily euro and Norwegian krone. In December 2017, we entered into foreign exchange zero cost collars buying the right to sell $1.25 billion CAD at $0.707 CAD and selling the right to buy $1.25 billion CAD at $0.842 CAD against the U.S. dollar. The collar expired during the second quarter of 2019 and we entered into new foreign currency exchange forward contracts to sell $1.35 billion CAD at $0.748 CAD against the U.S. dollar. Financial Instruments We invest in financial instruments with maturities based on our cash forecasts for the various accounts and currency pools we manage. The types of financial instruments in which we currently invest include: ● Time deposits: Interest bearing deposits placed with financial institutions. ● Demand deposits: Interest bearing deposits placed with financial institutions. Deposited funds can be withdrawn without notice. ● Commercial paper: Unsecured promissory notes issued by a corporation, commercial bank or government agency purchased at a discount to mature at par. ● U.S. government or government agency obligations: Securities issued by the U.S. government or U.S. government agencies. ● Corporate bonds: Unsecured debt securities issued by corporations. ● Asset-backed securities: Collateralized debt securities. The following investments are carried on our consolidated balance sheet at cost, plus accrued interest: Carrying Amount The following table reflects our investments in debt securities classified as available for sale at December 31, 2019 which are carried at fair value: Millions of Dollars Carrying Amount Cash and Cash Equivalents Short-Term Investments Investments and Long- Term Receivables Corporate Bonds Remaining maturities within one year $ 1 59 - Remaining maturities greater than one year through five years - - 99 Commercial Paper Remaining maturities within one year 8 30 - U.S. Government Obligations Remaining maturities within one year - 10 - Remaining maturities greater than one year through five years - - 15 Asset-backed Securities Remaining maturities greater than one year through five years - - 19 $ 9 99 133 The following table summarizes the amortized cost basis and fair value of investments in debt securities classified as available for sale at December 31, 2019: Millions of Dollars Amortized Cost Basis Fair Value Major Security Type Corporate bonds $ 159 159 Commercial paper 38 38 U.S. government obligations 25 25 Asset-backed securities 19 19 $ 241 241 Gross unrealized gains and gross unrealized losses included in other comprehensive income related to investments in debt securities classified as available for sale as of December 31, 2019, were negligible. There were no other-than-temporary impairments recognized in earnings or in other comprehensive income during the year ended December 31, 2019. Gross realized gains and gross realized losses included in earnings from sales and redemptions of investments in debt securities classified as available for sale during the year ended December 31, 2019, were negligible. The cost of securities sold and redeemed is determined using the specific identification method. Credit Risk Financial instruments potentially exposed to concentrations of credit risk consist primarily of cash equivalents, short-term investments, long-term investments in debt securities, OTC derivative contracts and trade receivables. Our cash equivalents and short-term investments are placed in high-quality commercial paper, government money market funds, government debt securities, time deposits with major international banks and financial institutions, and high-quality corporate bonds. Our long-term investments in debt securities are placed in high-quality corporate bonds, U.S. government obligations, and asset-backed securities. The credit risk from our OTC derivative contracts, such as forwards, swaps and options, 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 primarily with an exchange clearinghouse and subject to mandatory margin requirements until settled; however, we are exposed to the credit risk of those exchange brokers for receivables arising from daily margin cash calls, as well as for cash deposited to meet initial margin requirements. Our trade receivables result primarily from our petroleum 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 , and we continually monitor this exposure and the creditworthiness of the counterparties. We do not generally require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments and 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 or owed to others to be offset against amounts due to us. 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 rating. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if we fall below investment grade. Cash is the primary collateral in all contracts; however, many also permit us to post letters of credit as collateral, such as transactions administered through the New York Mercantile Exchange. The aggregate fair value of all derivative instruments with such credit risk-related contingent features that were in a liability position on December 31, 2019 and December 31, 2018, was $ 79 million and $ 62 million, respectively. For these instruments, no collateral was posted as of December 31, 2019 or December 31, 2018. If our credit rating had been downgraded below investment grade on December 31, 2019, we would be required to post $ 76 million of additional collateral, either with cash or letters of credit.

Derivative and Financial Instruments

Note 14—Derivative and Financial Instruments

We use futures, forwards, swaps and options in various markets to meet our customer

needs and capture

market opportunities.

Our commodity business primarily consists of

natural gas, crude oil, bitumen, LNG and

NGLs.

Our derivative instruments are held at fair value

on our consolidated balance sheet.

Where these balances have

the right of setoff, they are presented on a net basis.

Related cash flows are recorded as operating

activities on

our consolidated statement of cash flows.

On our consolidated income statement, realized

and unrealized gains

and losses are recognized either on a gross basis

if directly related to our physical business

or a net basis if held

for trading.

Gains and losses related to contracts that meet

and are designated with the NPNS exception are

recognized upon settlement.

We generally apply this exception to eligible crude contracts.

We do not use

hedge accounting for our commodity derivatives.

The following table presents the gross fair values

of our commodity derivatives, excluding

collateral, and the

line items where they appear on our consolidated

balance sheet:

Millions of Dollars

2019

2018

Assets

Prepaid expenses and other current assets

288

410

Other assets

Liabilities

Other accruals

283

370

Other liabilities and deferred credits

The gains (losses) from commodity derivatives

incurred, and the line items where they appear

on our

consolidated income statement were:

Millions of Dollars

2019

2018

2017

Sales and other operating revenues

141

Other income

Purchased commodities

(118)

(41)

(61)

The table below summarizes our material net exposures

resulting from outstanding commodity

derivative

contracts:

Open Position

Long/(Short)

2019

2018

Commodity

Natural gas and power (billions of cubic feet equivalent)

Fixed price

(5)

(17)

Basis

(23)

(1)

Foreign Currency Exchange Derivatives

We have foreign currency exchange rate risk resulting from international operations.

Our foreign currency

exchange derivative activity primarily

relates to managing our cash-related foreign currency

exchange rate

exposures, such as firm commitments for

capital programs or local currency tax payments,

dividends and cash

returns from net investments in foreign affiliates,

and investments in equity securities.

We do not elect hedge

accounting on our foreign currency exchange

derivatives.

The following table presents the gross fair values

of our foreign currency exchange derivatives,

excluding

collateral, and the line items where they appear

on our consolidated balance sheet:

Millions of Dollars

2019

2018

Assets

Prepaid expenses and other current assets

Liabilities

Other accruals

Other liabilities and deferred credits

The losses from foreign currency exchange derivatives

incurred and the line item where they appear

on our

consolidated income statement were:

Millions of Dollars

2019

2018

2017

Foreign currency transaction losses

We had the following net notional position of outstanding foreign currency exchange

derivatives:

In Millions

Notional Currency

2019

2018

Foreign Currency Exchange Derivatives

Sell U.S. dollar, buy British pound

USD

805

Sell British pound, buy other currencies*

GBP

Buy British pound, sell euro

GBP

Sell Canadian dollar, buy U.S. dollar

CAD

1,337

1,242

*Primarily euro and Norwegian krone.

In December 2017, we entered into foreign exchange zero cost collars buying the right to sell $1.25 billion

CAD at $0.707 CAD and selling the right to buy $1.25 billion CAD at $0.842 CAD against the U.S. dollar.

The collar expired during the second quarter of 2019 and we entered into new foreign currency exchange

forward contracts to sell $1.35 billion CAD at $0.748 CAD against the U.S. dollar.

Financial Instruments

We invest in financial instruments with maturities based on our cash forecasts for

the various accounts and

currency pools we manage.

The types of financial instruments in which we currently

invest include:

●

Time deposits: Interest bearing deposits placed with financial

institutions.

●

Demand deposits:

Interest bearing deposits placed with financial

institutions.

Deposited funds can be

withdrawn without notice.

●

Commercial paper: Unsecured promissory notes issued

by a corporation, commercial bank or

government agency purchased at a discount to

mature at par.

●

U.S. government or government agency obligations:

Securities issued by the U.S. government or

U.S.

government agencies.

●

Corporate bonds:

Unsecured debt securities issued by corporations.

●

Asset-backed securities: Collateralized debt securities.

The following investments are carried on our

consolidated balance sheet at cost, plus accrued

interest:

The following table reflects our investments

in debt securities classified as available

for sale at December 31,

2019 which are carried at fair value:

Millions of Dollars

Carrying Amount

Cash and

Cash

Equivalents

Short-Term

Investments

and Long-

Term

Receivables

Corporate Bonds

Remaining maturities within one year

Remaining maturities greater than one year through

five years

Commercial Paper

Remaining maturities within one year

U.S. Government Obligations

Remaining maturities within one year

Remaining maturities greater than one year through

five years

Asset-backed Securities

Remaining maturities greater than one year through

five years

133

The following table summarizes the amortized

cost basis and fair value of investments in

debt securities

classified as available for sale at December 31,

2019:

Millions of Dollars

Amortized Cost

Basis

Fair Value

Major Security Type

Corporate bonds

159

Commercial paper

U.S. government obligations

Asset-backed securities

241

Gross unrealized gains and gross unrealized losses

included in other comprehensive income related

investments in debt securities classified as available

for sale as of December 31, 2019, were negligible.

There were no other-than-temporary impairments

recognized in earnings or in other comprehensive

income

during the year ended December 31, 2019.

Gross realized gains and gross realized losses

included in earnings from sales and redemptions

of investments

in debt securities classified as available for sale

during the year ended December 31, 2019,

were negligible.

The cost of securities sold and redeemed is determined

using the specific identification method.

Credit Risk

Financial instruments potentially exposed to concentrations

of credit risk consist primarily of cash equivalents,

short-term investments, long-term investments

in debt securities, OTC derivative contracts and trade

receivables.

Our cash equivalents and short-term investments

are placed in high-quality commercial paper,

government money market funds, government debt

securities,

time deposits with major international banks and

financial institutions,

and high-quality corporate bonds.

Our long-term investments in debt securities

are

placed in high-quality corporate bonds, U.S. government

obligations, and asset-backed securities.

The credit risk from our OTC derivative contracts,

such as forwards, swaps and options, 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 primarily with an exchange

clearinghouse and subject to mandatory margin

requirements until settled; however, we are exposed to the credit

risk of those exchange brokers for receivables

arising from daily margin cash calls, as well as for cash

deposited to meet initial margin requirements.

Our trade receivables result primarily

from our petroleum 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

, and we continually monitor this exposure and

the

creditworthiness of the counterparties.

We do not generally require collateral to limit the exposure to loss;

however, we will sometimes use letters of credit, prepayments

and 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 or owed to others

to be offset against amounts due to us.

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 rating. The variable threshold amounts

typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert

to zero if we fall below investment grade. Cash is the primary collateral in all contracts; however, many also

permit us to post letters of credit as collateral, such as transactions administered through the New York

Mercantile Exchange.

The aggregate fair value of all derivative

instruments with such credit risk-related contingent

features that were

in a liability position on December 31, 2019 and

December 31, 2018, was $

million and $

million,

respectively.

For these instruments,

no collateral

was posted as of December 31, 2019 or December 31,

2018.

If our credit rating had been downgraded below

investment grade on December 31, 2019,

we would be

required to post $

million of additional collateral, either with

cash or letters of credit.