Derivative and Financial Instruments	3 Months Ended
Mar. 31, 2020
Derivative and Financial Instruments [Abstract]
Derivative and Financial Instruments	Note 13—Derivative and Financial Instruments Derivative 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 March 31 December 31 2020 2019 Assets Prepaid expenses and other current assets $ 364 288 Other assets 35 34 Liabilities Other accruals 336 283 Other liabilities and deferred credits 23 28 The gains (losses) from commodity derivatives incurred, and the line items where they appear on our consolidated income statement were: Millions of Dollars Three Months Ended March 31 2020 2019 Sales and other operating revenues $ 47 19 Other income (loss) 2 (1) Purchased commodities (27) (20) The table below summarizes our material net exposures resulting from outstanding commodity derivative contracts: Open Position Long/(Short) March 31 December 31 2020 2019 Commodity Natural gas and power (billion cubic feet equivalent) Fixed price - (5) Basis (19) (23) 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 March 31 December 31 2020 2019 Assets Prepaid expenses and other current assets $ 40 1 Other Assets 21 - Liabilities Other accruals 14 20 Other liabilities and deferred credits - 8 The gains from foreign currency exchange derivatives incurred and the line item where they appear on our consolidated income statement were: Millions of Dollars Three Months Ended March 31 2020 2019 Foreign currency transactions (gain) loss $ (74) (2) We had the following net notional position of outstanding foreign currency exchange derivatives: In Millions Notional Currency March 31 December 31 2020 2019 Foreign Currency Exchange Derivatives Buy GBP, sell euro GBP 5 4 Sell CAD, buy USD CAD 441 1,337 In the second quarter of 2019, we entered into foreign currency exchange contracts to sell CAD 1.35 billion at CAD 0.748 against the USD . In the first quarter of 2020, we entered into forward currency exchange contracts to buy CAD 0.9 billion at CAD 0.718 against the USD . 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 for a predetermined amount of time. ● 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: Millions of Dollars The following investments in debt securities classified as available for sale are carried on our consolidated balance sheet at fair value: Millions of Dollars Carrying Amount Cash and Cash Equivalents Short-Term Investments Investments and Long-Term Receivables March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019 Corporate Bonds Maturities within one year $ - 1 126 59 - - Maturities greater than one year through five years - - - - 140 99 Commercial Paper Maturities within one year 19 8 110 30 - - U.S. Government Obligations Maturities within one year - - - 10 - - Maturities greater than one year through five years - - - - 21 15 U.S. Government Agency Obligations Maturities greater than one year through five years - - - - 5 - Asset-backed Securities Maturities greater than one year through five years - - - - 38 19 $ 19 9 236 99 204 133 The following table summarizes the amortized cost basis and fair value of investments in debt securities classified as available for sale at March 31, 2020: Millions of Dollars Amortized Cost Basis Fair Value Major Security Type Corporate bonds $ 269 266 Commercial paper 129 129 U.S. government obligations 21 21 U.S. government agency obligations 5 5 Asset-backed securities 38 38 $ 462 459 As of March 31, 2020, total unrealized losses for debt securities classified as available for sale with net losses were negligible. Additionally, investments in these debt securities in an unrealized loss position as of March 31, 2020 for which an allowance for credit losses has not been recorded were negligible. For the three-month period ended March 31, 2020, gross realized gains and gross realized losses included in earnings from sales and redemptions of investments in debt securities classified as available for sale 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 and government agency obligations, asset-backed securities, and time deposits with major international banks and financial institutions. 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 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 at March 31, 2020 and December 31, 2019, was $ 65 million and $ 79 million, respectively. For these instruments, no collateral was posted as of March 31, 2020 or December 31, 2019. If our credit rating had been downgraded below investment grade at March 31, 2020, we would have been required to post $ 63 million of additional collateral, either with cash or letters of credit.

Derivative and Financial Instruments

Note 13—Derivative and Financial Instruments

Derivative 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

March 31

December 31

2020

2019

Assets

Prepaid expenses and other current assets

364

288

Other assets

Liabilities

Other accruals

336

283

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

Three Months Ended

March 31

2020

2019

Sales and other operating revenues

Other income (loss)

(1)

Purchased commodities

(27)

(20)

The table below summarizes our material net exposures

resulting from outstanding commodity

derivative

contracts:

Open Position

Long/(Short)

March 31

December 31

2020

2019

Commodity

Natural gas and power (billion cubic feet equivalent)

Fixed price

(5)

Basis

(19)

(23)

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

March 31

December 31

2020

2019

Assets

Prepaid expenses and other current assets

Other Assets

Liabilities

Other accruals

Other liabilities and deferred credits

The gains from foreign currency exchange derivatives

incurred and the line item where they appear

on our

consolidated income statement were:

Millions of Dollars

Three Months Ended

March 31

2020

2019

Foreign currency transactions (gain) loss

(74)

(2)

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

derivatives:

In Millions

Notional Currency

March 31

December 31

2020

2019

Foreign Currency Exchange Derivatives

Buy GBP,

sell euro

GBP

Sell CAD, buy USD

CAD

441

1,337

In the second quarter of 2019, we entered into foreign

currency exchange contracts to sell

CAD

1.35

billion at

CAD

0.748

against the

USD

In the first quarter of 2020, we entered into

forward currency exchange contracts

to buy

CAD

0.9

billion at CAD

0.718

against the

USD

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 for a predetermined amount

of time.

●

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 investments in debt securities

classified as available for sale are carried on our

consolidated balance

sheet at fair value:

Millions of Dollars

Carrying Amount

Cash and Cash Equivalents

Short-Term Investments

Investments and Long-Term

Receivables

March 31,

2020

December 31,

2019

March 31,

2020

December 31,

2019

March 31,

2020

December 31,

2019

Corporate Bonds

Maturities within one year

126

Maturities greater than one year through five years

140

Commercial Paper

Maturities within one year

110

U.S. Government Obligations

Maturities within one year

Maturities greater than one year through five years

U.S. Government Agency Obligations

Maturities greater than one year through five years

Asset-backed Securities

Maturities greater than one year through five years

236

204

133

The following table summarizes the amortized

cost basis and fair value of investments in

debt securities

classified as available for sale at March 31, 2020:

Millions of Dollars

Amortized Cost

Basis

Fair Value

Major Security Type

Corporate bonds

269

266

Commercial paper

129

U.S. government obligations

U.S. government agency obligations

Asset-backed securities

462

459

As of March 31, 2020, total unrealized losses for debt

securities classified as available for sale with net losses

were negligible.

Additionally, investments

in these debt securities in an unrealized loss

position as of March

31, 2020 for which an allowance for credit losses

has not been recorded were negligible.

For the three-month period ended March 31,

2020, gross realized gains and gross realized losses

included in

earnings from sales and redemptions of investments

in debt securities classified as available

for sale 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

and government agency obligations, asset-backed

securities, and time deposits with major international

banks and financial institutions.

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 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 at March 31, 2020 and

December 31, 2019, was $

million and $

million,

respectively.

For these instruments,

collateral was posted as of March 31, 2020 or

December 31, 2019.

our credit rating had been downgraded below investment

grade at March 31, 2020,

we would have been

required to post $

million of additional collateral, either with

cash or letters of credit.