What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-31 compared with 2024-04-29 · 293 added, 121 removed, 499 unchanged (45% of the section changed)

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EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT

Phillips 66 is uniquely positioned as a diversified and integrated downstream energy company operating with Midstream, Chemicals, Refining, and Marketing and Specialties (M&S) segments.

At March 31, 2024, we had total assets of $76.4 billion.

Phillips 66 is uniquely positioned as a diversified and integrated downstream energy provider operating with Midstream, Chemicals, Refining, Marketing and Specialties (M&S), and Renewable Fuels segments.

At June 30, 2024, we had total assets of $75.9 billion.

Our common stock trades on the New York Stock Exchange under the symbol PSX.

Executive Overview

In the first quarter of 2024, we reported earnings of $748 million and cash used in operating activities of $236 million, both of which were unfavorably impacted by lower realized refining margins and, in the case of operating cash flow, discretionary inventory builds.

Additionally, we received proceeds from debt issuances, net of debt repayments, of $802 million, funded capital expenditures and investments of $628 million, repurchased $1.2 billion of common stock, and paid dividends on our common stock of $448 million.

We ended the first quarter of 2024 with $1.6 billion of cash and cash equivalents and $3.5 billion of total committed capacity available under our revolving credit facility.

In the second quarter of 2024, we reported earnings of $1 billion and cash provided by operating activities of $2.1 billion.

During the quarter, we funded capital expenditures and investments of $367 million, repurchased $840 million of common stock, and paid dividends on our common stock of $485 million.

Additionally, we received proceeds from an asset disposition of $685 million.

We ended the second quarter of 2024 with $2.4 billion of cash and cash equivalents and $4.1 billion of total committed capacity available under our revolving credit facility.

Rodeo Renewable Energy Complex

As part of the Rodeo Renewed project, we are converting the San Francisco Refinery into the Rodeo Renewable Energy Complex, expanding commercial scale production of renewable diesel and positioning Phillips 66 as a leader in renewable fuels production.

The Rodeo Renewed project has progressed during the first quarter of 2024 with the facility now processing only renewable feedstocks and having 30,000 barrels per day of renewable fuels production capacity.

The Rodeo Renewable Energy Complex is on track to increase production capacity to 50,000 barrels per day (800 million gallons per year) of renewable fuels by the end of the second quarter of 2024.

The Rodeo Renewed project design also provides the capability of producing renewable jet fuel, a key component of sustainable aviation fuel.

The project advances our strategy to expand our renewable fuels production, lower our carbon footprint, and provide reliable, affordable energy that we expect to create long-term value for our shareholders.

We completed the conversion of our San Francisco Refinery in Rodeo, California, into the Rodeo Renewable Energy Complex (RREC), expanding commercial scale production of renewable diesel and positioning Phillips 66 as a leader in renewable fuels production.

The RREC processes approximately 50,000 barrels per day of renewable feedstocks into renewable fuels, including renewable diesel and renewable jet fuel.

The RREC is expected to start producing sustainable aviation fuel in the third quarter of 2024, with the flexibility to produce up to 10,000 barrels per day.

The RREC advances our strategy to expand renewable fuels production, lower our carbon footprint, and provide reliable, affordable energy that we expect will create long-term value for our shareholders.

Basis of Presentation

Effective April 1, 2024, we changed the internal financial information reviewed by our chief executive officer to evaluate performance and allocate resources to our operating segments.

This included changes in the composition of our operating segments, as well as measurement changes for certain activities between our operating segments.

The primary effects are summarized below:

• Establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in our Refining, M&S and Midstream segments.

• Change in method of allocating results for certain Gulf Coast distillate export activities from our M&S segment to our Refining segment.

• Reclassification of certain crude oil and international clean products trading activities between our M&S segment and our Refining segment.

• Change in reporting of our 16% investment in NOVONIX from our Midstream segment to Corporate and Other.

The segment realignment is presented for the three- and six-month periods ended June 30, 2024, with prior periods recast for comparability.

Business Environment

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Our NGL business, including DCP Midstream Class A Segment, DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills, LLC (DCP Southern Hills), contains both fee-based operations and operations directly impacted by NGL and natural gas prices.

During the first quarter of 2024, NGL and natural gas prices decreased, compared with the first quarter of 2023, as the result of increased production and limited growth in export infrastructure.

During the second quarter of 2024, compared with the second quarter of 2023, the NGL composite barrel price increased, partially due to crude oil prices increasing over the same period, while natural gas prices decreased over the same period primarily due to increased production, pipeline maintenance and limited growth in export infrastructure.

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 slightly decreased in the first quarter of 2024, compared with the first quarter of 2023, mainly due to lower polyethylene sales prices as a result of industry oversupply driven by recent capacity additions.

The benchmark high-density polyethylene chain margin decreased in the second quarter of 2024, compared with the second quarter of 2023, mainly due to lower polyethylene sales prices as a result of industry oversupply driven by recent 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 decreased to an average of $19.45 per barrel during the first quarter of 2024, from an average of $30.59 per barrel during the first quarter of 2023.

The decrease in the composite market crack spread was primarily driven by lower global prices for gasoline and higher crude oil prices.

Market cracks 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 decreased to an average of $18.96 per barrel during the second quarter of 2024, from an average of $28.65 per barrel during the second quarter of 2023.

The decrease in the composite market crack spread was primarily driven by higher crude oil costs and lower global prices for gasoline and diesel.

The price of U.S.

benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, increased to an average of $77.07 per barrel during the first quarter of 2024, from an average of $76.11 per barrel during the first quarter of 2023.

The increase in crude production in the United States limited significant escalation in crude prices.

benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, increased to an average of $80.73 per barrel during the second quarter of 2024, from an average of $73.78 per barrel during the second quarter of 2023.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined petroleum 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 petroleum products in the regions and countries where we operate.

Our Renewable Fuels segment consists of the operations and assets of the RREC, as well as the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.

Results for our Renewable Fuels segment are impacted by feedstock costs, throughput, and certain regulatory credits, as well as other market factors, largely determined by the relationship between supply and demand, and other operating costs.

RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three months ended March 31, 2024, is based on a comparison with the corresponding periods of 2023.

Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2024, is based on a comparison with the corresponding periods of 2023.

Consolidated Results

A summary of income before income taxes by business segment with a reconciliation to net income attributable to Phillips 66 follows:

A summary of income (loss) before income taxes by business segment with a reconciliation to net income attributable to Phillips 66 follows:

Millions of Dollars

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Midstream $ 767 620 1,321 1,336

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Marketing and Specialties 415 533 781 896

Renewable Fuels (55) 68 (110) 142

Corporate and Other (340) (344) (662) (638)

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Net income attributable to Phillips 66 $ 1,015 1,697 1,763 3,658

Our net income attributable to Phillips 66 in the first quarter of 2024 was $748 million, compared with $2 billion in the first quarter of 2023.

The decrease in net income attributable to Phillips 66 was primarily due to a decline in realized refining margins, partially offset by lower income tax expense.

See the “Segment Results” section for additional information on our segment results and Note 19—Income Taxes, in the Notes to Consolidated Financial Statements, for additional information on income taxes.

Our net income attributable to Phillips 66 in the second quarter of 2024 was $1 billion, compared with $1.7 billion in the second quarter of 2023.

Our net income attributable to Phillips 66 for the six months ended June 30, 2024, was $1.8 billion, compared with $3.7 billion for the six months ended June 30, 2023.

The decrease in net income attributable to Phillips 66 in both periods was primarily due to a decline in realized refining margins, partially offset by lower income tax expense and a before-tax gain of $238 million recognized in the second quarter of 2024 in our Midstream segment associated with the sale of our 25% ownership interest in Rockies Express Pipeline LLC (REX).

See the “Segment Results” section for additional information on our segment results.

Also see Note 20—Income Taxes and Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements, for additional information on income taxes and the before-tax gain associated with the sale of our 25% ownership interest in REX, respectively.

Statement of Income Analysis

Sales and other operating revenues for the first quarter of 2024 increased 4%, and purchased crude oil and products increased 10%.

The increases were mainly due to higher prices for crude oil, while the increase in sales was also attributable to higher refined petroleum product sales volumes, partially offset by lower prices for NGL, natural gas and refined petroleum products.

Equity in earnings of affiliates decreased 14% in the first quarter of 2024.

The decrease reflects lower equity earnings from WRB Refining LP (WRB), primarily due to lower realized refining margins.

Other income increased $49 million in the first quarter of 2024, primarily due to higher results from trading activities.

Impairments increased $157 million in the first quarter of 2024, primarily due to the recognition of before-tax impairment charges reported in our Refining and Midstream segments.

Refer to Note 8—Properties, Plants and Equipment, in the Notes to Consolidated Financial Statements, for additional information.

Taxes other than income taxes decreased 20% in the first quarter of 2024.

The decrease was primarily driven by tax credits received from renewable diesel blending activity, as well as lower property taxes.

Interest and debt expense increased 18% in the first quarter of 2024.

The increase was primarily driven by higher average debt principal balances.

Sales and other operating revenues for the second quarter and six-month period of 2024 increased 9% and 6%, respectively, and purchased crude oil and products increased 13% and 12%, respectively.

These increases were mainly due to higher prices for crude oil, partially offset by lower prices for natural gas and refined petroleum products.

Additionally, higher refined petroleum product sales volumes contributed to the increase in sales in both periods.

Equity in earnings of affiliates decreased 13% and 14% in the second quarter and six-month period of 2024, respectively.

The decrease in both periods was primarily due to lower equity earnings from WRB Refining LP (WRB) and Excel Paralubes LLC (Excel), both primarily due to lower margins.

These decreases were partially offset by higher equity earnings from CPChem.

See the Chemicals segment analysis in the “Segment Results” section for additional information regarding CPChem.

Net gain on dispositions increased $249 million and $215 million in the second quarter and six-month period of 2024, respectively, primarily due to a before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024 associated with the sale of our 25% ownership interest in REX.

Other income decreased 41% in the second quarter of 2024, primarily due to lower interest income as a result of lower cash balances.

Impairments increased $221 million and $378 million in the second quarter and six-month period of 2024, respectively, primarily due to before-tax impairment charges reported in our Midstream segment related to certain gathering and processing assets in Texas.

In addition, the six-month period of 2024 included before-tax impairment charges reported in our Refining and Midstream segments totaling $163 million related to certain crude oil processing and logistics assets in California.

Taxes other than income taxes decreased 72% and 44% in the second quarter and six-month period of 2024.

The decreases were primarily driven by tax credits received from renewable diesel blending activity.

Interest and debt expense decreased 13% in the second quarter of 2024.

The decrease was primarily related to the early redemption of DCP Midstream LP’s (DCP LP) 5.850% junior subordinated notes that occurred in the second quarter of 2023, partially offset by higher average debt principal balances.

See Note 11—Debt, in the Notes to Consolidated Financial Statements, for additional information regarding debt.

Income tax expense decreased 65% in the first quarter of 2024, primarily due to lower income before income taxes.

Income tax expense decreased 43% and 54% in the second quarter and six-month period of 2024, primarily due to lower income before income taxes.

See Note 20—Income Taxes, in the Notes to Consolidated Financial Statements, for information regarding our effective income tax rates.

Net income attributable to noncontrolling interests decreased 89% in the first quarter of 2024.

The decrease reflects the impacts of the DCP Midstream, LP Merger (DCP LP Merger) in June 2023.

See Note 2—DCP Midstream, LP Merger (DCP LP Merger), in the Notes to Consolidated Financial Statements for additional information.

Net income attributable to noncontrolling interests decreased 86% and 88% in the second quarter and six-month period of 2024, respectively.

The decrease in both periods relates to before-tax impairment charges reported in our Midstream segment primarily related to certain DCP LP gathering and processing assets in Texas.

The decrease in the six-month period of 2024 also reflects the impacts of the acquisition of all publicly held common units of DCP LP (DCP LP Merger) in June 2023.

See Note 2—DCP Midstream, LP Merger (DCP LP Merger) and Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information.

Segment Results

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Millions of Dollars

Income (Loss) Before Income Taxes

Income Before Income Taxes

Transportation $ 547 285 791 590

NGL and Other 306 408

NOVONIX 5 (12)

NGL 220 335 530 746

Total Midstream $ 767 620 1,321 1,336

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NGL production** 437 444 427 433

Wellhead Volume (Bcf/D)** 4.4 4.5

Wellhead Volume (billion cubic feet per day)** 4.5 4.5 4.5 4.5

* Pipelines represent the sum of volumes transported through each separately tariffed consolidated pipeline segment, excluding NGL pipelines.

** Includes 100% of DCP Midstream Class A Segment’s volumes.

Dollars Per Gallon

Market Indicator

Weighted-Average NGL Price* $ 0.70 0.74

Weighted-Average NGL Price (dollars per gallon)* $ 0.68 0.61 0.69 0.68

* Based on index prices from the Mont Belvieu market hub, which are weighted by NGL component mix.

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These activities are mainly in the United States.

This segment also includes our investment in NOVONIX.

Results from our Midstream segment decreased $148 million in the first quarter of 2024.

Results from our Transportation business decreased $63 million in the first quarter of 2024, primarily due to a before-tax impairment charge of $59 million recognized in the first quarter of 2024 associated with certain crude processing and logistics assets in California, as well as a before-tax gain of $36 million recognized in the first quarter of 2023 associated with the sale of a terminal in Louisiana.

These decreases were partially offset by higher pipeline tariffs and improved earnings from our equity affiliates primarily driven by increased volumes.

Results from our NGL and Other business decreased $102 million in the first quarter of 2024, primarily due to unfavorable pricing driven by falling natural gas prices and winter weather impacts.

The fair value of our investment in NOVONIX increased by $5 million in the first quarter of 2024, compared with a decline of $12 million in the first quarter of 2023.

Results from our Midstream segment increased $147 million in the second quarter of 2024 and decreased $15 million in the six-month period of 2024.

Results from our Transportation business increased $262 million and $201 million in the second quarter and six-month period of 2024, respectively, primarily due to a before-tax gain of $238 million recognized in the second quarter of 2024 associated with the sale of our 25% ownership interest in REX.

See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements, for additional information.

Results from our NGL business decreased $115 million and $216 million in the second quarter and six-month period of 2024, respectively, primarily due to before-tax impairment charges associated with certain gathering and processing assets in Texas, partially offset by lower maintenance costs.

The decrease in the second quarter of 2024 was also partially offset by improved fractionation results and higher pipeline volumes.

See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results.

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Millions of Dollars

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Ethylene produced is primarily consumed within CPChem for the production of polyethylene, normal alpha olefins and polyethylene pipe.

CPChem manufactures and 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.

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.

Results from the Chemicals segment increased $7 million in the first quarter of 2024, primarily due to higher volumes and lower utility costs, partially offset by lower margins driven by decreased sales prices.

Results from the Chemicals segment increased $30 million and $37 million in the second quarter and six-month period of 2024, respectively.

The increase in the second quarter of 2024 was primarily due to higher margins driven by a decrease in feedstock costs, partially offset by lower equity earnings from CPChem’s equity affiliates.

The increase in the six-month period of 2024 was primarily due to higher sales volumes, partially offset by lower equity earnings from CPChem’s equity affiliates and decreased margins.

See the “Executive Overview and Business Environment” section for information on market factors impacting CPChem’s results.

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Millions of Dollars

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Three Months Ended

June 30 Six Months Ended

Operating Statistics 2024 2023 2024 2023

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Accordingly, effective January 1, 2024, we have excluded the Rodeo facility from the operating statistics above.

The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, at 12 refineries in the United States and Europe.

Results from our Refining segment decreased $1,477 million in the first quarter of 2024, primarily due to lower realized margins, partially offset by higher volumes.

The decrease in realized margins in the first quarter of 2024 was primarily driven by lower market crack spreads, feedstock advantage and secondary product margins.

Our worldwide refining crude oil capacity utilization rate was 92% in the first quarter of 2024, compared with 90% in the first quarter of 2023.

The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, at 11 refineries in the United States and Europe.

Results from our Refining segment decreased $873 million and $2,251 million in the second quarter and six-month period of 2024, respectively, primarily due to lower realized margins, partially offset by higher volumes.

The decrease in realized margins in both periods was primarily driven by lower market crack spreads.

Our worldwide refining crude oil capacity utilization rate was 98% and 95% in the second quarter and six-month period of 2024, respectively, compared with 93% and 92% in the second quarter and six-month period of 2023, respectively.

See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results.

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Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Millions of Dollars

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Income Before Income Taxes

$ 1.16 1.82 1.26 1.65

International 5.02 5.31 4.00 4.49

Realized Marketing Fuel Margins*

$ 1.70 2.25 1.65 2.12

International 5.87 6.50 5.38 5.79

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Distillates 1,008 974 988 911

The M&S segment purchases for resale and markets refined petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, mainly in the United States and Europe.

Other 52 35 50 31

2,431 2,251 2,331 2,128

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 base oils and lubricants.

Before-tax income from the M&S segment decreased $22 million in the first quarter of 2024.

The decrease was primarily driven by lower U.S.

marketing margins, partially offset by higher U.S.

Results from the M&S segment decreased $118 million and $115 million in the second quarter and six-month period of 2024, respectively.

The decrease in the second quarter of 2024 was primarily driven by lower U.S.

marketing fuel margins and decreased equity earnings from affiliates.

The decrease in the six-month period of 2024 was primarily due to lower realized marketing fuel margins and decreased equity earnings from affiliates, partially offset by higher U.S.

marketing volumes.

See the “Executive Overview and Business Environment” section for information on marketing fuel margins and other market factors impacting this quarter’s results.

Renewable Fuels

Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Millions of Dollars

Income (Loss) Before Income Taxes $ (55) 68 (110) 142

Thousands of Barrels Daily

Operating Statistics

Total Renewable Fuels Produced 31 10 20 11

Total Renewable Fuel Sales 45 27 40 27

Market Indicators

Chicago Board of Trade (CBOT) soybean oil (dollars per pound) $ 0.45 0.53 0.46 0.57

California Low-Carbon Fuel Standard (LCFS) carbon credit (dollars per metric ton) 51.83 81.11 57.85 73.64

California Air Resource Board (CARB) ultra-low-sulfur diesel (ULSD) - San Francisco (dollars per gallon) 2.64 2.44 2.65 2.68

Biodiesel Renewable Identification Number (RIN) (dollars per RIN) 0.51 1.51 0.54 1.57

The Renewable Fuels segment processes renewable feedstocks into renewable products at the RREC.

In addition, this segment also includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.

Results from the Renewable Fuels segment decreased $123 million and $252 million in the second quarter and six-month period of 2024, respectively.

The decrease in the second quarter was primarily driven by higher feedstock and other costs related to the ramp-up of the RREC.

The decreases were partially offset by increased renewable fuel sales, as well as tax credits received from renewable diesel blending activity.

The decrease in the six-month period of 2023 was primarily driven by higher feedstock and other costs related to the ramp-up of the RREC, as well as lower benefits from emissions credits.

The decreases were partially offset by increased renewable fuel sales, as well as tax credits received from renewable diesel blending activity.

See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results.

Corporate and Other

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Three Months Ended

June 30 Six Months Ended

2024 2023 2024 2023

Loss Before Income Taxes

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Corporate overhead and other (133) (147) (274) (305)

NOVONIX (7) (15) (2) (27)

Total Corporate and Other $ (340) (344) (662) (638)

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Corporate overhead and other includes general and administrative expenses, technology costs, environmental costs associated with sites no longer in operation, business transformation restructuring costs, foreign currency transaction gains and losses, and other costs not directly associated with an operating segment.

Net interest expense increased $61 million in the first quarter of 2024.

The increase was primarily driven by higher interest expense as a result of higher average debt principal balances, as well as lower interest income.

See Note 10—Debt, in the Notes to Consolidated Financial Statements, for additional information regarding debt.

Corporate overhead and other costs decreased $14 million in the first quarter of 2024 primarily due to a decrease in consulting fees associated with our business transformation.

Corporate and Other also includes the change in the fair value of our investment in NOVONIX.

Net interest expense increased $18 million and $80 million in the second quarter and six-month period of 2024, respectively.

The increase in both periods was primarily driven by lower interest income as a result of lower cash balances and higher average debt principal balances, partially offset by lower interest expense primarily related to the $53 million before-tax loss on early redemption of DCP LP’s 5.850% junior subordinated notes in May 2023.

See Note 11—Debt, in the Notes to Consolidated Financial Statements, for additional information.

Corporate overhead and other costs decreased $14 million and $31 million in the second quarter and six-month period of 2024, respectively, primarily due to a decrease in consulting fees associated with our business transformation.

The fair value of our investment in NOVONIX declined by $7 million in the second quarter of 2024, compared with a decline of $15 million in the second quarter of 2023.

The fair value of our investment in NOVONIX declined by $2 million in the six-month period of 2024, compared with a decline of $27 million in the six-month period of 2023.

CAPITAL RESOURCES AND LIQUIDITY

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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 the first three months of 2024, we used $236 million of cash in our operations and we received proceeds from debt issuances, net of debt repayments, of $802 million.

During the first six months of 2024, we generated $1.9 billion of cash from operations.

We received proceeds from an asset disposition of $685 million.

Additionally, proceeds from debt issuances, net of debt repayments, were $599 million.

We used available cash primarily to repurchase shares of our common stock for $2 billion, fund capital expenditures and investments of $995 million, and pay dividends on our common stock of $933 million.

During the first three months of 2024, cash and cash equivalents decreased to $1.6 billion.

During the first six months of 2024, cash and cash equivalents decreased to $2.4 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 the first three months of 2024, cash used in our operations was $236 million, compared with cash provided by operations of $1.2 billion for the first three months of 2023.

The decrease was primarily due to lower realized refining margins, as well as larger net unfavorable working capital impacts.

The unfavorable working capital impacts were primarily driven by the effects of changes in commodity prices, the timing of payments and collections, and discretionary inventory builds.

During the first six months of 2024, cash generated by operating activities was $1.9 billion, compared with $2.2 billion for the first six months of 2023.

The decrease was primarily due to lower earnings, primarily 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.

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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 margins and prices.

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 changes in margins and prices.

Equity Affiliate Operating Distributions

Our operating cash flows are also impacted by distribution decisions made by our equity affiliates.

During the first three months of 2024, cash used in operations included aggregate distributions of $348 million from our equity affiliates, while cash from operations during the first three months of 2023 included aggregate distributions of $369 million from our equity affiliates.

During the first six months of 2024, cash from operations included aggregate distributions of $656 million from our equity affiliates, while cash from operations during the first six months of 2023 included aggregate distributions of $608 million from our equity affiliates.

We cannot control the amount of future dividends from equity affiliates;

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Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year, commencing on June 30, 2024.

On June 20, 2023, Phillips 66 Company borrowed $1.25 billion under its delayed draw term loan that matures in June 2026.

On March 29, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.25 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

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• $500 million aggregate principal amount of 5.300% Senior Notes due June 2033 (2033 Notes).

Related Party Advance Term Loan Agreement

On May 31, 2023, we borrowed $75 million from WRB through an Advance Term Loan Agreement.

The debt matures on May 31, 2038.

Borrowings bear interest at a floating rate of 1.042% plus the adjusted term Secured Overnight Financing Rate (SOFR), payable on the last day of each month.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On June 25, 2024, we entered into a $400 million uncommitted credit facility (the Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor.

The Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities.

The Uncommitted Facility has no commitment fees or compensating balance requirements.

Outstanding borrowings under the 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 June 30, 2024, $400 million was outstanding under the 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.

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Outstanding borrowings under the Facility bear interest at either:

(a) the adjusted term Secured Overnight Financing Rate (as described in the Facility) in effect from time to time plus the applicable margin;

(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 March 31, 2024, and December 31, 2023, no amount had been drawn under our revolving credit facilities.

At June 30, 2024 and December 31, 2023, no amount had been drawn under the Facility or the previous revolving credit facility, respectively.

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 March 31, 2024, $1.5 billion of commercial paper had been issued under this program.

At June 30, 2024, $899 million of commercial paper had been issued under this program.

At December 31, 2023, no borrowings were outstanding under this program.

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Total Committed Capacity Available

At March 31, 2024, and December 31, 2023, we had approximately $3.5 billion and $6.4 billion, respectively, of total committed capacity available under the credit facilities described above.

At June 30, 2024 and December 31, 2023, we had approximately $4.1 billion and $6.4 billion, respectively, of total committed capacity available under the credit facilities described above.

On June 14, 2024, we sold our 25% ownership interest in REX for approximately $685 million.

See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements, for additional information.

Pending Disposition

On June 21, 2024, we entered into an agreement to sell our ownership interests in certain gathering and processing assets in Louisiana and Alabama for approximately $170 million, which approximates the net book value of the assets being sold.

The transaction is expected to close in the third quarter of 2024, subject to completion of customary closing conditions and satisfaction of certain due diligence requirements.

Off-Balance Sheet Arrangements

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Under the operating lease agreement for our headquarters facility in Houston, Texas, we have the option, at the end of the lease term in September 2025, to request to renew the lease, purchase the facility or assist the lessor in marketing it for resale.

We have a residual value guarantee associated with the operating lease agreement with a maximum potential future exposure of $514 million at March 31, 2024.

We have a residual value guarantee associated with the operating lease agreement with a maximum potential future exposure of $514 million at June 30, 2024.

We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $172 million.

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The public comment period concluded on December 13, 2023.

The USACE plans to review the comments and issue its final EIS in the fall of 2024.

The USACE plans to review the comments and issue its final EIS in early 2025.

The Record of Decision will follow within 30 to 60 days after the issuance of the final EIS.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access with an aggregate principal amount outstanding of $1.85 billion at March 31, 2024.

The final EIS must be completed before the USACE can reauthorize the easement for the pipeline.

If reauthorization occurs, new litigation challenging the reauthorization may be filed.

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 June 30, 2024, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $850 million.

In addition, Phillips 66 Partners LP (Phillips 66 Partners), a wholly owned subsidiary of Phillips 66, 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 March 31, 2024, our 25% share of the maximum potential equity contributions under the CECU was approximately $467 million.

At June 30, 2024, 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 $20 million annually, in addition to the potential obligations under the CECU at March 31, 2024.

On April 1, 2024, Dakota Access’ wholly owned subsidiary repaid $1 billion aggregate principal amount of its outstanding senior notes upon maturity.

As a result of the debt repayment on April 1, 2024, our share of the maximum potential equity contributions under the CECU decreased to approximately $215 million, and our share of scheduled interest payments on the notes that we could be required to support decreased to approximately $10 million annually.

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 June 30, 2024.

See Note 12—Guarantees, in the Notes to Consolidated Financial Statements, for additional information regarding our guarantees.

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Debt Financing

Our debt balance at March 31, 2024, and December 31, 2023, was $20.2 billion and $19.4 billion, respectively.

Our total debt-to-capital ratio was 40% and 38% at March 31, 2024, and December 31, 2023, respectively.

Our debt balance at June 30, 2024 and December 31, 2023, was $20 billion and $19.4 billion, respectively.

Our total debt-to-capital ratio was 40% and 38% at June 30, 2024 and December 31, 2023, respectively.

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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During the three months ended March 31, 2024, we repaid $375 million of borrowings that were outstanding under DCP LP’s credit and accounts receivable securitization facilities at December 31, 2023.

On March 15, 2023, DCP LP repaid its 3.875% senior unsecured notes due March 2023 with an aggregate principal amount of $500 million.

On February 7, 2024, our Board of Directors declared a quarterly cash dividend of $1.05 per common share.

This dividend was paid on March 1, 2024, to shareholders of record as of the close of business on February 20, 2024.

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.

During the six months ended June 30, 2024 and June 30, 2023, DCP LP made cash distributions of $24 million and $102 million, respectively, to common unit holders other than Phillips 66 and its subsidiaries.

Pending Acquisition

On May 17, 2024, we entered into an agreement to acquire Pinnacle Midland Parent LLC to expand our natural gas gathering and processing operations in the Permian Basin.

The transaction closed on July 1, 2024, for total cash consideration of $566 million.

On April 3, 2024, our Board of Directors declared a quarterly cash dividend of $1.15 per common share.

This dividend is payable on June 3, 2024, to shareholders of record as of the close of business on May 20, 2024.

This dividend was paid on June 3, 2024, to shareholders of record as of the close of business on May 20, 2024.

On July 10, 2024, our Board of Directors declared a quarterly cash dividend of $1.15 per common share.

This dividend is payable on September 3, 2024, to shareholders of record as of the close of business on August 20, 2024.

Share Repurchases

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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.

For the three months ended March 31, 2024, we repurchased 8 million shares at an aggregate cost of approximately $1.2 billion.

For the six months ended June 30, 2024, we repurchased 13.6 million shares at an aggregate cost of approximately $2 billion.

Since July 2012, we have repurchased 227.4 million shares under our share repurchase program at an aggregate cost of $20.1 billion.

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Employee Benefit Plan Contributions

During the three months ended March 31, 2024, we contributed $5 million to our U.S.

During the six months ended June 30, 2024, we contributed $18 million to our U.S.

pension and other postretirement benefit plans and $2 million to our international pension plans.

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Millions of Dollars

Three Months Ended

Six Months Ended

Capital Expenditures and Investments

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Marketing and Specialties 35 36

Renewable Fuels 345 300

Corporate and Other 24 37

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* Our share of joint ventures’ capital spending.

During the first three months of 2024, capital spending in our Midstream segment included:

• A contribution to Dakota Access to fund our 25% share of Dakota Access’ debt repayment in April 2024.

During the first six months of 2024, capital spending in our Midstream segment included:

• A contribution to Dakota Access to fund our 25% share of Dakota Access’ debt repayment.

• Expansion of gathering systems in the DJ Basin and Permian Basin.

• Spending associated with other return projects, well connections, reliability and maintenance projects.

During the first three months of 2024, on a 100% basis, CPChem’s capital expenditures and investments were $401 million.

During the first six months of 2024, on a 100% basis, CPChem’s capital expenditures and investments were $800 million.

The capital spending was primarily for the development of petrochemical projects on the U.S.

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CPChem’s capital program was self-funded, and we expect CPChem to continue self-funding its capital program for the remainder of 2024.

Capital spending for the Refining segment during the first three months of 2024 was primarily for projects to produce renewable fuels, enhance the yield of higher-value products, and sustain the reliability and safety of our facilities.

Capital spending for the Refining segment during the first six months of 2024 was primarily for projects to enhance the yield of higher-value products and sustain the reliability and safety of our facilities.

Major capital activities included:

• Construction of facilities to produce renewable fuels at the Rodeo Renewable Energy Complex.

• Installation of facilities to improve market capture at the Lake Charles and Sweeny refineries, as well as the jointly owned Wood River Refinery.

• Capital spend to improve reliability at the Ponca City, Lake Charles and Sweeny refineries, as well as the jointly owned Wood River Refinery.

• Installation of facilities to improve market capture at the Bayway, Lake Charles and Sweeny refineries, as well as the jointly owned Wood River Refinery.

• Capital spending to improve reliability at the Humber, Lake Charles and Sweeny refineries.

Marketing and Specialties

Capital spending for the M&S segment during the first three months of 2024 was primarily for the continued acquisition, development and enhancement of retail sites in Europe, spend associated with marketing and commercial fleet fueling businesses on the U.S.

Capital spending for the M&S segment during the first six months of 2024 was primarily for the continued development and enhancement of retail sites in Europe, spend associated with marketing and commercial fleet fueling businesses on the U.S.

West Coast, and marketing-related information technology enhancements.

Renewable Fuels

Capital spending for the Renewable Fuels segment during the first six months of 2024 was related to the construction of facilities to produce renewable fuels at the RREC.

Corporate and Other

Capital spending for Corporate and Other during the first three months of 2024 was primarily related to information technology.

Capital spending for Corporate and Other during the first six months of 2024 was primarily related to information technology.

Contingencies

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For a discussion of the most significant international and federal environmental laws and regulations to which we are subject, see the “Environmental” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K.

We are required to purchase renewable identification numbers (RINs) in the open market to satisfy the portion of our obligation under the Renewable Fuel Standard (RFS) that is not fulfilled by blending renewable fuels into the motor fuels we produce.

For the three months ended March 31, 2024 and 2023, we incurred expenses of $93 million and $238 million, respectively, associated with our obligation to purchase RINs in the open market to comply with the RFS for our wholly owned refineries.

We are required to purchase RINs in the open market to satisfy the portion of our obligation under the Renewable Fuel Standard (RFS) that is not fulfilled by blending renewable fuels into the motor fuels we produce.

For the six months ended June 30, 2024 and 2023, we incurred expenses of $96 million and $293 million, respectively, 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.

Our jointly owned refineries also incurred expenses associated with the purchase of RINs in the open market, of which our share was $59 million and $114 million for the three months ended March 31, 2024 and 2023, respectively.

Our jointly owned refineries also incurred expenses associated with the purchase of RINs in the open market, of which our share was $114 million and $217 million for the six months ended June 30, 2024 and 2023, respectively.

These expenses are included in the “Equity in earnings of affiliates” line item on our consolidated statement of income.

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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 March 31, 2024, and December 31, 2023, we had been notified of potential liability under CERCLA and comparable state laws at 21 sites within the United States.

At December 31, 2023, we had been notified of potential liability under CERCLA and comparable state laws at 21 sites within the United States.

During the second quarter of 2024, our legal organization approved the removal of two sites, thus, leaving 19 unresolved sites with potential liability at June 30, 2024.

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.

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All guarantees are full and unconditional.

At March 31, 2024, $14 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

At June 30, 2024, $14 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

Summarized financial information of the Obligor Group is presented on a combined basis.

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Significant intercompany transactions and receivable/payable balances between the Obligor Group and non-guarantor subsidiaries are presented separately in the summarized financial information.

The summarized results of operations for the three months ended March 31, 2024, and the summarized financial position at March 31, 2024, and December 31, 2023, for the Obligor Group on a combined basis were:

The summarized results of operations for the six months ended June 30, 2024, and the summarized financial position at June 30, 2024 and December 31, 2023, for the Obligor Group on a combined basis were:

Summarized Combined Statement of Income Millions of Dollars

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Sales and other operating revenues $ 56,060

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Coast Worldwide

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Income before income taxes $ 15 42 243 2 302

Taxes other than income taxes 15 19 22 18 74

Depreciation, amortization and impairments 51 64 44 44 203

Selling, general and administrative expenses 12 9 25 5 51

Operating expenses 264 269 142 209 884

Equity in (earnings) losses of affiliates 2 — (35) — (33)

Other segment (income) expense, net 18 1 (22) 2 (1)

Proportional share of refining gross margins contributed by equity affiliates

32 — 228 — 260

Realized refining margins $ 409 404 647 280 1,740

Total processed inputs ( thousands of barrels )

50,545 51,204 27,994 21,553 151,296

Adjusted total processed inputs ( thousands of barrels )*

50,545 51,204 50,805 21,553 174,107

Income before income taxes per barrel ( dollars per

$ 0.30 0.82 8.69 0.10 2.00

Realized refining margins ( dollars per barrel )***

8.10 7.88 12.75 13.06 10.01

Three Months Ended June 30, 2023

Income before income taxes $ 132 313 633 97 1,175

Taxes other than income taxes

17 25 26 27 95

Depreciation, amortization and impairments

53 62 39 53 207

Selling, general and administrative expenses

Operating expenses

236 249 157 291 933

Equity in (earnings) losses of affiliates 2 — (119) — (117)

Other segment (income) expense, net 6 12 (8) 1 11

Proportional share of refining gross margins contributed by equity affiliates

22 — 313 — 335

Realized refining margins

$ 477 665 1,058 476 2,676

Total processed inputs ( thousands of barrels )

44,781 50,266 27,370 30,154 152,571

Adjusted total processed inputs ( thousands of barrels )*

44,781 50,266 46,841 30,154 172,042

Income before income taxes per barrel ( dollars per barrel )**

$ 2.95 6.22 23.13 3.23 7.70

Realized refining margins ( dollars per barrel )***

10.64 13.22 22.58 15.80 15.55

* 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.

Millions of Dollars, Except as Indicated

Realized Refining Margins Atlantic Basin/

Coast Central

Corridor West

Coast Worldwide

Six Months Ended June 30, 2024

Income (loss) before income taxes $ 93 162 456 (193) 518

Taxes other than income taxes

39 57 50 49 195

Depreciation, amortization and impairments

103 126 88 200 517

Selling, general and administrative expenses

15 15 49 10 89

Operating expenses

515 570 285 467 1,837

Equity in (earnings) losses of affiliates 3 (1) (143) — (141)

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Realized refining margins

$ 864 924 1,249 531 3,568

Total processed inputs ( thousands of barrels )

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97,456 98,696 98,717 45,192 340,061

Income (loss) before income taxes per barrel ( dollars per barrel )**

Income before income taxes per barrel ( dollars per barrel )**

$ 0.95 1.64 8.51 (4.27) 1.76

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8.87 9.36 12.66 11.77 10.50

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Income before income taxes $ 260 1,042 1,365 102 2,769

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Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

June 30, 2024 Three Months Ended

June 30, 2023

International U.S.

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Other expense, net 14 (2) 3 5

Marketing margins 328 186 397 202

margin for nonfuel related sales — 16 — 16

Realized marketing fuel margins $ 328 170 397 186

Total fuel sales volumes ( thousands of barrels )

192,398 28,893 176,349 28,605

Income before income taxes per barrel ( dollars per barrel )

$ 1.16 5.02 1.82 5.31

Realized marketing fuel margins ( dollars per barrel )**

1.70 5.87 2.25 6.50

* Includes other nonfuel revenues.

** 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.

Millions of Dollars, Except as Indicated

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

International U.S.

International

Realized Marketing Fuel Margins

Income before income taxes $ 465 226 543 253

Depreciation and amortization 19 36 6 39

Selling, general and administrative expenses 403 127 384 123

Equity in earnings of affiliates (14) (53) (15) (53)

Other operating revenues* (231) (15) (231) (18)

Other expense, net 25 13 9 10

Special items:

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Factors that could cause actual results to differ materially from those in our forward-looking statements include:

• Fluctuations in market conditions, including NGL, crude oil, refined petroleum product and natural gas prices and refining, marketing and petrochemical margins and demand.

• Changes in governmental policies relating to NGL, crude oil, natural gas or refined petroleum products pricing, regulation or taxation, including exports.

• 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 supply and demand and correspondingly, commodity prices.

• Actions taken by OPEC and non-OPEC oil producing countries impacting crude oil production and correspondingly, commodity prices.

• Our ability to achieve the expected benefits of the DCP LP integration, including the realization of expected synergies.

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• Unexpected technological or commercial difficulties in manufacturing, refining or transporting our products, including chemical products.

• Lack of, or disruptions in, adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum products.

• The level and success of drilling and quality of production volumes around our midstream assets.

• 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.

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• Changes to worldwide government policies relating to renewable fuels, climate change and greenhouse gas emissions that adversely affect programs like the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels.

• Domestic and international economic and political developments including armed hostilities, such as the Russia-Ukraine war, instability in the financial services and banking sector, excess inflation, rising interest rates, expropriation of assets and changes in fiscal policy.

• The impact on commercial activity and demand for refined petroleum 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.

• Domestic and international economic and political developments including armed hostilities, such as the Russia-Ukraine war, 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, asset dispositions or acquisitions that we pursue.

• Potential disruption or interruption of our operations or those of our joint ventures due to litigation or other governmental or regulatory 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.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our commodity price risk and interest rate risk at March 31, 2024, did not differ materially from the risks disclosed under Item 7A of our 2023 Annual Report on Form 10-K.

Our commodity price risk and interest rate risk at June 30, 2024, did not differ materially from the risks disclosed under Item 7A of our 2023 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis