What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-25 compared with 2024-10-29 · 242 added, 377 removed, 491 unchanged (56% of the section changed)

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It contains forward-looking statements including, without limitation, statements relating to the company’s plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking.

The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “priorities” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking.

The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made.

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

At September 30, 2024, we had total assets of $75.1 billion.

At March 31, 2025, we had total assets of $71.8 billion.

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

Executive Overview

In the third quarter of 2024, we reported earnings of $346 million and cash provided by operating activities of $1.1 billion.

During the quarter, we funded capital expenditures and investments of $358 million, completed the acquisition of Pinnacle Midland Parent LLC (Pinnacle Midstream) for total cash consideration of $567 million, purchased government obligations of $1.1 billion that were ultimately used to extinguish debt, and received proceeds from asset dispositions of $219 million.

Additionally, we received proceeds from debt issuances, net of debt repayments, of $1.1 billion, repurchased $800 million of common stock, and paid dividends on our common stock of $477 million.

We ended the third quarter of 2024 with $1.6 billion of cash and cash equivalents and $5.3 billion of total committed capacity available under our credit facilities.

See Note 12—Debt, in the Notes to Consolidated Financial Statements for additional information regarding our purchase of government obligations used to extinguish debt.

In the first quarter of 2025, we reported earnings of $487 million and cash provided by operating activities of $187 million.

During the quarter, we funded capital expenditures and investments of $423 million and received proceeds from asset dispositions of $2 billion.

Additionally, we repaid $1.3 billion of debt, paid $247 million to repurchase shares of our common stock and paid $469 million of dividends to our common stockholders.

We ended the first quarter of 2025 with $1.5 billion of cash and cash equivalents and $5.4 billion of total committed capacity available under our credit facilities.

Strategic Priorities Update

In October 2024, we announced progress on our strategic priorities intended to enhance long-term shareholder value.

• We have distributed $12.5 billion through share repurchases and dividends since July 2022 and are on pace to achieve our $13 billion to $15 billion target by year-end 2024.

• We achieved $1.4 billion in run-rate business transformation savings, delivering on our cost reduction target.

• We expanded our Midstream NGL wellhead-to-market business with the acquisition of Pinnacle Midstream and approved a follow-on processing plant expansion in the Midland Basin expected to be completed in mid-year 2025.

• We have achieved our target of over $400 million of run-rate synergies from the integration of DCP Midstream Class A Segment.

• We have received proceeds of $1.3 billion since 2022 toward our $3 billion asset disposition target.

In addition, we recently agreed to sell our 49% interest in a Switzerland-based retail joint venture for cash proceeds of 1.06 billion Swiss francs (approximately $1.24 billion), and our interests in non-core Midstream assets in North Dakota for $140 million.

Refer to Note 8—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information.

In January 2025, we announced the next phase of priorities along with financial and operational initiatives through year-end 2027.

With these targets, the company is continuing to focus on creating shareholder value;

driving disciplined growth and returns;

and maintaining financial strength and flexibility.

We are focused on operational and cost reduction targets intended to drive world-class operations across our portfolio, while maintaining emphasis on growing our Midstream and Chemicals businesses.

• Shareholder Returns – We believe shareholder value is enhanced through, among other things, a secure, competitive and growing dividend, complemented by share repurchases.

Our financial target aims to return greater than 50% of net cash provided by operating activities to shareholders through share repurchases and dividends.

The amount and timing of future dividend payments and the level and timing of future share repurchases is subject to the discretion of, and approval by, our Board of Directors and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans.

• In April 2025, our Board of Directors declared a quarterly cash dividend of $1.20 per common share, representing a $0.05 increase, reflecting our commitment to a secure, competitive and growing dividend.

• World-Class Operations – We are focused on achieving operational excellence by optimizing utilization rates and product yield at our refineries through reliable and safe operations, which will enable us to capture the value available in the market in terms of prices and margins.

With our new targets, we remain focused on a competitive cost structure and plan to enhance Refining segment returns and increase our utilization rates by focusing on low-capital, higher-return projects that increase asset reliability and improve market capture.

• We continue to focus on Refining performance, targeting an annual clean product yield of greater than 86%, crude oil capacity utilization rates higher than industry average, and continuing to improve our competitive cost structure.

• Disciplined Growth and Returns – A disciplined capital allocation process ensures we invest in projects that are expected to generate competitive returns.

Our strategy remains focused on growing our Midstream and Chemicals businesses.

Within our Midstream segment, we are primarily focused on maximizing the value of our fully integrated natural gas liquids (NGL) wellhead-to-market value chain.

• In January 2025, we closed on the sale of our 49% ownership in Coop Mineraloel AG (Coop) and DCP Midstream, LP’s (DCP LP) 25% ownership in Gulf Coast Express Pipeline LLC (GCX) and received total proceeds of $2 billion.

We will continue to evaluate future opportunities to rationalize our asset portfolio.

We have budgeted $2.1 billion for 2025 capital expenditures and investments, exclusive of acquisitions, which includes $1.1 billion of growth capital, primarily in our Midstream segment.

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

• We continued expansion of our Midstream NGL wellhead-to-market platform with a recent acquisition.

On April 1, 2025, we acquired all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, together with their respective subsidiaries, which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems.

Refer to Note 3—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

• Our new financial targets through 2027 reflect our plans to grow our Midstream and Chemicals businesses, as well as maintain total annual capital expenditures and investments of approximately $2 billion, excluding acquisitions.

• Financial Strength and Flexibility – We use a variety of funding sources to support our liquidity requirements, including cash from operations, debt and proceeds from dispositions.

Our focus remains on protecting the stable cash generation from the Midstream and Marketing and Specialties (M&S) businesses while balancing continued portfolio optimization.

• We are targeting reductions of total debt to $17 billion and to lower our debt to capital ratio.

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.

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

The primary effects are summarized below.

Prior period information has been recast for comparability.

• 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.

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

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

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

• Change in reporting of our investment in NOVONIX Limited (NOVONIX) from our Midstream operating segment to Corporate and Other.

Business Environment

The Midstream segment includes our Transportation and natural gas liquids (NGL) businesses.

Our Midstream segment includes our Transportation and natural gas liquids (NGL) businesses.

Our Transportation business contains fee-based operations not directly exposed to commodity price risk.

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

The weighted-average NGL price was $0.64 per gallon during the third quarter of 2024, compared with $0.67 per gallon during the third quarter of 2023.

The Henry Hub natural gas price was $2.09 per million British thermal units (MMBtu) during the third quarter of 2024, compared with $2.58 per MMBtu during the third quarter of 2023.

The decrease in NGL prices and natural gas prices was partially due to constraints on Permian natural gas exit capacity.

The Chemicals segment consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem).

The weighted-average NGL price was $0.74 per gallon during the first quarter of 2025, compared with $0.70 per gallon during the first quarter of 2024.

The Henry Hub natural gas price was $4.27 per million British thermal units (MMBtu) during the first quarter of 2025, compared with $2.41 per MMBtu during the first quarter of 2024.

The increases in NGL and natural gas prices were primarily due to colder weather and an increase in liquefied natural gas exports.

Our 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 increased in the third quarter of 2024, compared with the third quarter of 2023, mainly due to improved polyethylene sales prices and lower natural gas and ethane prices.

The benchmark high-density polyethylene chain margin was 10.9 cents per pound in the first quarter of 2025, compared with 16.4 cents per pound in the first quarter of 2024.

The decrease was mainly due to higher natural gas and ethane prices and lower polyethylene demand.

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 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 $16.50 per barrel during the third quarter of 2024, from an average of $36.06 per barrel during the third quarter of 2023.

The decrease in the composite market crack spreads was primarily driven by higher supply due to increased global refining utilization and lower global prices for gasoline and diesel.

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 $15.83 per barrel during the first quarter of 2025, from an average of $19.45 per barrel during the first quarter of 2024.

The decrease in the composite market crack spread was primarily driven by market instability as geopolitical events drove demand concerns.

The price of U.S.

benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, decreased to an average of $75.19 per barrel during the third quarter of 2024, from an average of $82.49 per barrel during the third 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 Rodeo Renewable Energy Complex (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.

benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, decreased to an average of $71.46 per barrel during the first quarter of 2025, from an average of $77.07 per barrel during the first quarter of 2024, primarily due to increased supply.

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

Our Renewable Fuels segment consists of the operations and assets of the Rodeo Renewable Energy Complex (Rodeo Complex), 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 several factors, including the market price of renewable fuels, feedstock costs, throughput, operating costs and the value of certain regulatory credits, as well as other market factors, largely determined by the relationship between supply and demand.

RESULTS OF OPERATIONS

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

Unless otherwise indicated, discussion of results for the three months ended March 31, 2025, is based on a comparison with the corresponding period of 2024.

Consolidated Results

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Millions of Dollars

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September 30 Nine Months Ended

2024 2023 2024 2023

Three Months Ended March 31

Midstream $ 751 554

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Net income attributable to Phillips 66 $ 487 748

Our net income attributable to Phillips 66 in the third quarter of 2024 was $346 million, compared with $2.1 billion in the third quarter of 2023.

Our net income attributable to Phillips 66 for the nine months ended September 30, 2024, was $2.1 billion, compared with $5.8 billion for the nine months ended September 30, 2023.

The decrease in both periods was primarily due to a decline in realized refining margins primarily driven by lower market crack spreads and an accrual recorded in the third quarter of 2024 related to litigation with Propel Fuels, Inc.

(Propel Fuels), partially offset by higher equity earnings from CPChem and lower income tax expense.

See the “Segment Results” section for additional information on our segment results and Note 22—Income Taxes, in the Notes to Consolidated Financial Statements for additional information on income taxes.

See the “Contingencies” section and Note 14—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.

Our net income attributable to Phillips 66 in the first quarter of 2025 was $487 million, compared with $748 million in the first quarter of 2024.

The decrease was primarily due to a decline in realized refining margins primarily driven by lower market crack spreads, as well as lower volumes and higher costs driven by planned turnaround activity.

The decrease was also attributable to lower equity earnings from CPChem and declining domestic marketing fuel margins.

These decreases were partially offset by a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in our M&S segment.

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

Statement of Income Analysis

Sales and other operating revenues decreased 10% for the three months ended September 30, 2024 and were flat for the nine months ended September 30, 2024.

Purchased crude oil and products decreased 6% and increased 5% for the three and nine months ended September 30, 2024, respectively.

The decreases in both line items for the three months ended September 30, 2024, were mainly due to lower prices for crude oil, NGL, natural gas and refined petroleum products.

The increase in purchased crude oil and products for the nine months ended September 30, 2024, was primarily due to increased refined petroleum products volumes, partially offset by lower prices for natural gas and refined petroleum products.

Equity in earnings of affiliates decreased 10% for the nine months ended September 30, 2024.

The decrease was primarily attributable to lower equity earnings from WRB Refining LP (WRB) as a result of lower margins and decreased equity earnings from Excel Paralubes LLC due to declining margins, partially offset by lower maintenance costs.

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

Sales and other operating revenues and purchased crude oil and products decreased 15% for the three months ended March 31, 2025.

The decreases in both line items were due to lower prices for refined petroleum products and crude oil, partially offset by an increase in prices for NGL, as well as lower volumes primarily attributable to turnaround activity.

Equity in earnings of affiliates decreased 71% for the three months ended March 31, 2025.

The decrease was primarily attributable to lower equity earnings from WRB Refining LP (WRB) resulting from lower margins, as well as lower equity earnings from CPChem.

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

Net gain on dispositions decreased 98% for the three months ended September 30, 2024 and increased 93% for the nine months ended September 30, 2024, respectively.

The decrease for the three months ended September 30, 2024, was primarily due to a before-tax gain of $101 million recognized in the Midstream segment in the third quarter of 2023 associated with the sale of our 25% ownership interest in the South Texas Gateway Terminal.

The increase for the nine months ended September 30, 2024, was 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 Rockies Express Pipeline LLC (REX), partially offset by before-tax gains totaling $137 million associated with the sale of our 25% ownership interest in the South Texas Gateway Terminal and the Belle Chasse Terminal in 2023.

Other income increased $69 million and $77 million for the three and nine months ended September 30, 2024, respectively.

The increase for the three months ended September 30, 2024, was primarily due to higher results from trading activities.

The increase for the nine months ended September 30, 2024, was primarily attributable to higher results from trading activities and changes in the fair value of our investment in NOVONIX, partially offset by lower interest income as a result of lower cash balances.

Selling, general and administrative expenses increased 78% and 23% for the three and nine months September 30, 2024, primarily due to an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels.

The increase during the nine months ended September 30, 2024, was partially offset by lower employee-related expenses.

See Note 14—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.

Depreciation and amortization increased 11% for the three months ended September 30, 2024, primarily due to 10 days, or $25 million, of accelerated depreciation recorded in the third quarter of 2024 associated with our Los Angeles Refinery, as well as depreciation and amortization associated with the ramp-up of the RREC.

Net gain on dispositions increased $1,087 million for the three months ended March 31, 2025, primarily due to a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in the M&S segment.

Refer to Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the sale of Coop.

Other income decreased 42% for the three months ended March 31, 2025, primarily due to lower results from trading activities, as well as a decrease in the fair value of our investment in NOVONIX.

These decreases were partially offset by Clean Fuel Production credits recorded in the first quarter of 2025.

Operating expenses increased 12% for the three months ended March 31, 2025.

The increase was primarily due to higher turnaround and utility costs.

Depreciation and amortization increased 57% for the three months ended March 31, 2025, primarily due to $246 million of accelerated depreciation recorded in the first quarter of 2025 associated with our plan to cease operations at our Los Angeles Refinery in the fourth quarter of 2025.

See Note 2—Restructuring, in the Notes to Consolidated Financial Statements for information regarding our plans to cease operations at our Los Angeles Refinery.

Impairments increased $26 million and $404 million for the three and nine months ended September 30, 2024, respectively.

The increase for the three months ended September 30, 2024, was primarily due to before-tax impairments recorded in our Midstream segment related to certain crude gathering assets in Texas.

The increase for the nine months ended September 30, 2024, was primarily driven by before-tax impairments related to certain gathering and processing assets in Texas, certain crude oil processing and logistics assets in California, and certain crude gathering assets in Texas.

Impairments decreased 84% for the three months ended March 31, 2025.

The decrease for the three months ended March 31, 2025, was primarily due to before-tax impairments of $163 million recorded in our Refining and Midstream segments in the first quarter of 2024 related to certain crude oil processing and logistics assets in California.

See Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding impairments.

Taxes other than income taxes decreased 69% and 52% for the three and nine months ended September 30, 2024, respectively.

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

Income tax expense decreased 93% and 69% for the three and nine months ended September 30, 2024, respectively.

The decreases were primarily due to lower income before income taxes.

Taxes other than income taxes increased 41% for the three months ended March 31, 2025.

The increase was primarily driven by the expiration of the Biodiesel Blender Tax Credit, as well as an increase in taxes related to feedstock imports at the Rodeo Complex.

Income tax expense decreased 40% for the three months ended March 31, 2025, 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 50% and 79% for the three and nine months ended September 30, 2024.

The decrease for the three and nine months ended September 30, 2024, primarily reflects the impacts of the acquisition of all publicly held common units of DCP LP (DCP LP Merger) in June 2023.

The decrease in the nine months ended September 30, 2024 also reflects before-tax impairments reported in our Midstream segment related to certain DCP LP gathering and processing assets in Texas.

See Note 2—DCP Midstream, LP Merger (DCP LP Merger), and Note 10—Impairments, in the Notes to Consolidated Financial Statements for additional information.

Net income attributable to noncontrolling interests increased $26 million for the three months ended March 31, 2025, due to higher results from DCP LP primarily driven by the sale of GCX in January 2025.

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

Segment Results

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Transportation $ 243 244

NGL 390 338 920 1,084

Total Midstream $ 751 554

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Operating Statistics

NGL fractionated** 728 703 717 700

NGL production** 439 432 431 432

Wellhead Volume (billion cubic feet per day)** 4.1 4.4

NGL production** 437 417

Pipeline Throughput–Y-Grade to Market*** 704 714

NGL fractionated 748 679

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

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

* * Includes 100% of DCP Midstream Class A Segment.

*** Represents volumes delivered to major fractionation market hubs, including Mont Belvieu, Sweeny and Conway.

Includes 100% of DCP Midstream Class A Segment and Phillips 66’s direct interest in DCP Sand Hills and DCP Southern Hills.

The Midstream segment provides crude oil and refined petroleum product transportation, terminaling and processing services;

NGL production, transportation, storage, fractionation, processing and marketing services;

NGL production, transportation, storage, fractionation, processing, marketing and export services;

natural gas gathering, compressing, treating, processing, storage, transportation and marketing services;

and condensate recovery.

These activities are mainly in the United States.

Results from our Midstream segment decreased $80 million and $95 million for the three and nine months ended September 30, 2024, respectively.

Results from our Transportation business decreased $132 million and increased $69 million for the three and nine months ended September 30, 2024, respectively.

The decrease in the three months ended September 30, 2024, is primarily due to a before-tax gain of $101 million in the third quarter of 2023 associated with the sale of our 25% ownership interest in the South Texas Gateway Terminal, as well as an impairment of $28 million in the third quarter of 2024 related to certain crude gathering assets in Texas.

The increase in the nine months ended September 30, 2024, is 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 and increased volumes supporting our Refining segment.

The increase in the nine months ended September 30, 2024, is partially offset by before-tax gains totaling $137 million recognized in 2023 associated with the sale of our 25% ownership interest in the South Texas Gateway Terminal and the Belle Chasse Terminal, as well as impairments recognized in 2024 on certain crude gathering assets in Texas and certain crude oil processing and logistics assets in California totaling $87 million, and decreased earnings from our equity affiliates.

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

Results from our NGL business increased $52 million and decreased $164 million for the three and nine months ended September 30, 2024, respectively.

The increase in the three months ended September 30, 2024, is primarily due to higher liquefied petroleum gas (LPG) cargo volumes and margins.

The decrease in the nine months ended September 30, 2024, is primarily due to before-tax impairment charges recognized in 2024 associated with certain gathering and processing assets in Texas and unfavorable pricing driven by falling natural gas prices and winter weather impacts, partially offset by higher LPG cargo volumes and margins, lower maintenance costs and improved pipeline volumes.

Results from our Midstream segment increased $197 million for the three months ended March 31, 2025.

Results from our Transportation business for the three months ended March 31, 2025, were in line with results for the three months ended March 31, 2024.

Results from our NGL business increased $198 million for the three months ended March 31, 2025, primarily due to a before-tax gain of $68 million recognized in the first quarter of 2025 on the sale of DCP LP’s 25% ownership interest in GCX, contributions from recently acquired gathering and processing assets, increased liquefied petroleum gas cargo volumes and margins, as well as, improved NGL and natural gas prices and increased fractionation volumes.

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

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2024 2023 2024 2023

Three Months Ended March 31

Millions of Dollars

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Unless otherwise noted, amounts referenced below reflect our net 50% interest in CPChem.

Results from the Chemicals segment increased $238 million and $275 million for the three and nine months ended September 30, 2024, respectively, primarily due to improved margins driven by higher sales prices and lower feedstock costs, as well as increased volumes and decreased utility costs.

Results from the Chemicals segment decreased $92 million for the three months ended March 31, 2025, primarily due to decreased polyethylene margins driven by lower sales prices and higher feedstock costs, lower volumes, and increased utility costs.

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

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Three Months Ended March 31

Millions of Dollars

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* See the “Non-GAAP Reconciliations” section for a reconciliation of this non-GAAP measure to the most directly comparable measure under generally accepted accounting principles in the United States (GAAP), income (loss) before income taxes per barrel.

On September 20, 2024, we approved a plan to cease operations at our Los Angeles Refinery in the fourth quarter of 2025 and are evaluating the future use of the property.

In October 2024, we announced our intention to cease operations at our Los Angeles Refinery in the fourth quarter of 2025, and we are evaluating potential future uses of the property.

See Note 2—Restructuring, in the Notes to Consolidated Financial Statements for additional information.

In early 2024, we ceased crude operations at the San Francisco Refinery as part of the conversion of the refinery into the Rodeo Complex.

Thousands of Barrels Daily

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Three Months Ended March 31

Operating Statistics 2025 2024

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* Includes our share of equity affiliates.

** As part of our plans to convert the San Francisco Refinery into a renewable fuels facility, in the first quarter of 2023, we ceased operations at the Santa Maria facility in Arroyo Grande, California, which reduced net crude throughput capacity from 120 MBD to 75 MBD.

In October 2023, we further reduced net crude throughput capacity from 75 MBD to 52 MBD as we shut down one of the two crude units at the Rodeo facility.

Effective January 1, 2024, net crude throughput capacity was 52 MBD.

The remaining net crude throughput capacity came offline upon the shutdown of the Rodeo facility’s second crude unit in February 2024.

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, at 11 refineries in the United States and Europe.

Results from our Refining segment decreased $1,820 million and $4,071 million for the three and nine months ended September 30, 2024, respectively.

The decrease for the three months ended September 30, 2024, was primarily due to lower realized margins driven by lower market crack spreads, partially offset by unfavorable inventory hedging impacts during the corresponding period of 2023.

The decrease for the nine months ended September 30, 2024, was primarily due to lower realized margins driven by lower market crack spreads, partially offset by lower utility, maintenance and employee-related costs.

Our worldwide refining crude oil capacity utilization rate was 94% and 95% for the three and nine months ended September 30, 2024, respectively, compared with 95% and 93% for the three and nine months ended September 30, 2023, respectively.

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

Results from our Refining segment decreased $1,153 million for the three months ended March 31, 2025, primarily due to lower realized margins as a result of declining market crack spreads, as well as lower volumes and higher costs driven by planned turnaround activity.

Our worldwide refining crude oil capacity utilization rate was 80% and 92% for the three months ended March 31, 2025 and 2024, respectively.

The decrease for the three months ended March 31, 2025, was primarily due to higher turnaround activity.

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

Marketing and Specialties

Three Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

Three Months Ended March 31

Millions of Dollars

Income (Loss) Before Income Taxes $ (22) 605 759 1,501

Income Before Income Taxes $ 1,282 366

Dollars Per Barrel

Income (Loss) Before Income Taxes

$ (1.43) 2.42 0.37 1.92

Income Before Income Taxes

International 39.88 2.94

Realized Marketing Fuel Margins*

$ 2.45 2.85 1.92 2.38

International 4.87 4.88

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Thousands of Barrels Daily

Marketing Refined Petroleum Product Sales

Marketing Refined Product Sales

Gasoline 1,194 1,215

Distillates 906 968

Other 51 26 50 29

2,294 2,266 2,318 2,173

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.

The M&S segment purchases for resale and markets refined products, mainly in the United States and Europe.

In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

Results from the M&S segment decreased $627 million and $742 million for the three and nine months ended September 30, 2024, respectively.

The decrease for the three and nine months ended September 30, 2024, was primarily driven by an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels.

In addition, the decrease in the three months ended September 30, 2024, was attributable to lower U.S.

marketing fuel margins, partially offset by higher volumes, improved results from our specialty lubricants and other businesses and higher international marketing fuel margins.

The decrease in the nine months ended September 30, 2024, was also due to lower U.S.

marketing fuel margins, partially offset by higher volumes.

Results from the M&S segment increased $916 million for the three months ended March 31, 2025.

The increase was primarily due to a before-tax gain of $1 billion associated with the sale of our investment in Coop, partially offset by lower domestic marketing fuel margins.

Refer to Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the sale of Coop.

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

September 30 Nine Months Ended

2024 2023 2024 2023

Three Months Ended March 31

Millions of Dollars

Income (Loss) Before Income Taxes $ (116) 22 (226) 164

Loss Before Income Taxes $ (185) (55)

Thousands of Barrels Daily

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Biodiesel Renewable Identification Number (RIN) (dollars per RIN) 0.79 0.58

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 $138 million and $390 million for the three and nine months ended September 30, 2024, respectively.

The decrease in both periods was primarily driven by higher feedstock and other costs related to the ramp-up of the RREC, as well as lower emissions credit prices.

This decrease was partially offset by increased emissions credit volumes, higher renewable fuel sales, and tax credits generated from renewable diesel blending activity.

The Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery.

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

Results from the Renewable Fuels segment decreased $130 million for the three months ended March 31, 2025.

The decrease was primarily driven by higher feedstock costs at the Rodeo Complex, partially offset by increased renewable fuels sales.

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

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Millions of Dollars

Three Months Ended

September 30 Nine Months Ended

2024 2023 2024 2023

Three Months Ended March 31

Loss Before Income Taxes

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Net interest expense consists of interest and financing expense, net of interest income and capitalized interest.

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.

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

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

Net interest expense increased $27 million and $107 million for the three and nine months ended September 30, 2024, respectively.

The increase in the three months ended September 30, 2024, was primarily driven by decreased interest income as a result of lower cash balances and lower capitalized interest.

The increase in the nine months ended September 30, 2024, was primarily driven by decreased 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 12—Debt, in the Notes to Consolidated Financial Statements for additional information.

Corporate overhead and other costs decreased $46 million and $77 million for the three and nine months ended September 30, 2024, respectively, primarily due to a decrease in consulting fees associated with our business transformation, as well as lower employee-related expenses.

There was no change in the fair value of our investment in NOVONIX in the three months ended September 30, 2024, compared with a decline of $8 million in the three months ended September 30, 2023.

The fair value of our investment in NOVONIX declined by $2 million in the nine months ended September 30, 2024, compared with a decline of $35 million in the nine months ended September 30, 2023.

See Note 15—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information regarding our investment in NOVONIX.

Net interest expense for the three months ended March 31, 2025, was in line with net interest expense for the three months ended March 31, 2024.

Corporate overhead and other costs increased $33 million for the three months ended March 31, 2025, primarily due to higher depreciation expense associated with information technology assets and a charge of $21 million associated with canceled projects, partially offset by lower employee-related expenses.

The fair value of our investment in NOVONIX declined by $15 million in the three months ended March 31, 2025, compared with an increase of $5 million in the three months ended March 31, 2024.

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 nine months of 2024, we generated $3 billion of cash from operations.

We received proceeds from debt issuances, net of debt repayments, of $1.7 billion.

Additionally, we received proceeds from asset dispositions of $906 million.

We used available cash primarily to repurchase shares of our common stock for $2.8 billion, pay dividends on our common stock of $1.4 billion, fund capital expenditures and investments of $1.4 billion, purchase government obligations of $1.1 billion that were ultimately used to extinguish debt, and complete the acquisition of Pinnacle Midstream for total cash consideration of $567 million.

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

During the first three months of 2025, we generated $187 million of cash from operations.

We funded capital expenditures and investments of $423 million and received proceeds from asset dispositions of $2 billion.

Additionally, we repaid $1.3 billion of debt, paid $247 million to repurchase shares of our common stock and paid $469 million of dividends to our common stockholders.

During the first three months of 2025, cash and cash equivalents decreased to $1.5 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.

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Operating Activities

During the first nine months of 2024, cash generated by operating activities was $3 billion, compared with $4.8 billion for the first nine 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.

During the first three months of 2025, cash generated by operating activities was $187 million, compared with cash used in operations of $236 million for the first three months of 2024.

The increase was primarily due to more favorable working capital impacts, partially offset by lower earnings.

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 changes in 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 fluctuations 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 nine months of 2024, cash from operations included aggregate distributions of $1,045 million from our equity affiliates, while cash from operations during the first nine months of 2023 included aggregate distributions of $969 million from our equity affiliates.

During the first three months of 2025, cash from operations included aggregate distributions of $273 million from our equity affiliates, while cash from operations during the first three months of 2024 included aggregate distributions of $348 million from our equity affiliates.

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

therefore, future dividend payments by these equity affiliates are not assured.

Senior Notes Issuances

On September 9, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.8 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

The senior unsecured notes issuance consisted of:

• $600 million aggregate principal amount of 5.250% Senior Notes due 2031 (Additional 2031 Notes).

• $600 million aggregate principal amount of 4.950% Senior Notes due 2035 (2035 Notes).

• $600 million aggregate principal amount of 5.500% Senior Notes due 2055 (2055 Notes).

Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year, commencing on December 15, 2024.

Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15, commencing on March 15, 2025.

On February 28, 2024, Phillips 66 Company issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

Debt Issuances

On February 28, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

The senior unsecured notes issuance consisted of:

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Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced 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 issued $1.25 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

The senior unsecured notes issuance consisted of:

• $750 million aggregate principal amount of 4.950% Senior Notes due December 2027.

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

Discharge of Senior Notes

On September 20, 2024, we extinguished (i) the remaining $441 million outstanding principal amount of Phillips 66 Company’s 3.605% senior notes due February 2025 (2025 P66 Co Notes), and (ii) the remaining $650 million outstanding principal amount of Phillips 66’s 3.850% senior notes due April 2025 (the 2025 PSX Notes, and together with the 2025 P66 Co Notes, the Discharged Notes), whereby we irrevocably transferred a total of $1,100 million in government obligations to the trustee of the 2025 P66 Co Notes and the 2025 PSX Notes.

The cash paid to purchase the government obligations is included within investing cash flows on our consolidated statement of cash flows.

These government obligations will yield sufficient principal and interest over their remaining term to permit the trustee to satisfy the remaining principal and interest due on the Discharged Notes.

Phillips 66 and Phillips 66 Company are no longer the primary obligors under the Discharged Notes.

The transfer of the government obligations to the trustee was accounted for as a transfer of financial assets.

If the trustee is unable to apply the government obligations to fund the remaining principal and interest payments on the Discharged Notes, then the Company’s obligations under the Indenture with respect to the Discharged Notes will be revived and reinstated.

We deem the likelihood of such event to be remote with no impact to the legal isolation of the assets.

Accordingly, the senior notes and the government obligations were derecognized on our balance sheet at September 30, 2024.

For the three and nine months ended September 30, 2024, we recognized an immaterial gain on the extinguishment of this debt.

Related Party Advance Term Loan Agreement

At September 30, 2024 and December 31, 2023, borrowings outstanding under our Advance Term Loan agreements with WRB Refining LP (WRB) totaled $290 million.

Borrowings under these agreements are due between 2035 and 2038 and bear interest at a floating rate based on adjusted term Secured Overnight Financing Rate (SOFR) plus an applicable margin, payable on the last day of each month.

Accounts Receivable Securitization

On September 30, 2024, Phillips 66 Company entered into a 364-day, $500 million accounts receivable securitization facility (the Receivables Securitization Facility).

Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its receivables, together with related security and interests in the proceeds thereof, to its wholly owned subsidiary, Phillips 66 Receivables LLC (P66 Receivables), a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility.

Under the Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain receivables in an amount not to exceed $500 million in the aggregate, and will secure its obligations with a pledge of undivided interests in such receivables, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder.

Sales of accounts receivables under the Receivables Securitization Facility meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet.

P66 Receivables guarantees payment, in full, for accounts receivables sold to the purchasers.

For the three months ended March 31, 2025, we sold $130 million of accounts receivables for cash proceeds under the Receivables Securitization Facility.

We recognized an immaterial charge associated with the transfer of financial assets, which is included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income during the three months ended March 31, 2025.

At March 31, 2025, we had utilized $130 million of our $500 million Receivable Securitization Facility from sold accounts receivables not yet remitted to the purchaser.

Additionally, we had no outstanding borrowings at March 31, 2025.

Therefore, at March 31, 2025, we had unused capacity of $370 million.

At December 31, 2024, we had utilized the full $500 million of our Receivables Securitization Facility from $125 million of sold accounts receivables not yet remitted to the purchaser and $375 million of outstanding borrowings.

On April 1, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $500 million to $1 billion.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On September 30, 2024, Phillips 66 Company entered into a 364-day, $500 million accounts receivable securitization facility (the Receivables Securitization Facility).

Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its receivables, together with related security and interests in the proceeds thereof, to its wholly-owned subsidiary, Phillips 66 Receivables LLC, a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility.

Under the Receivables Securitization Facility, Phillips 66 Receivables LLC may borrow and incur indebtedness from, and/or sell certain receivables to the Purchaser/Lenders in an amount not to exceed $500 million in the aggregate, and will secure its obligations with a pledge of undivided interests in such receivables, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder.

Accounts outstanding under the Receivables Securitization Facility accrue interest at an adjusted SOFR.

Phillips 66 Receivables LLC’s sole activity consists of purchasing receivables from Phillips 66 Company, providing those receivables as collateral for Phillips 66 Receivables LLC’s borrowings or on-selling certain of its receivables under the Receivables Securitization Facility.

Phillips 66 Receivables LLC is a separate legal entity with its own separate creditors, who will be entitled, upon its liquidation, to be satisfied out of Phillips 66 Receivables LLC’s assets prior to assets or value in Phillips 66 Receivables LLC becoming available to Phillips 66 Receivables LLC’s equity holders, and the assets of Phillips 66 Receivables LLC, including any funds of Phillips 66 Receivables LLC that may be commingled with funds of any of its affiliates for purposes of cash management and related efficiencies, are not available to pay creditors of Phillips 66 Company, Phillips 66 or any affiliate thereof.

Collections on receivables in excess of amounts owed by Phillips 66 Receivables LLC under the Receivables Securitization Facility are available to Phillips 66 Receivables LLC for payment to Phillips 66 Company, for sales of its receivables to Phillips 66 Receivables LLC under the Securitization Facility, and otherwise for distribution to Phillips 66 Company, in each case, subject to the terms set forth in the Receivables Securitization Facility.

The amount available for borrowing or sale of receivables may be limited by the availability of eligible receivables and other customary factors and conditions, as well as the covenants set forth in the Receivables Securitization Facility.

At September 30, 2024, we had unused capacity of $500 million under the Receivables Securitization Facility.

On January 13, 2025, we entered into a $200 million uncommitted credit facility (the 2025 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor.

The 2025 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities.

The 2025 Uncommitted Facility has no commitment fees or compensating balance requirements.

Outstanding borrowings under the 2025 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR plus the applicable margin, (b) the adjusted daily simple SOFR plus the applicable margin or (c) the base 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 March 31, 2025, no amount had been drawn under the 2025 Uncommitted Facility.

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.

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We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty.

At September 30, 2024, $400 million was outstanding under the Uncommitted Facility.

At March 31, 2025, no amount had been drawn under the 2024 Uncommitted Facility, while at December 31, 2024, the entire $400 million had been drawn.

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

At March 31, 2025, and December 31, 2024, no amount had been drawn under the Facility.

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 September 30, 2024, $200 million of commercial paper had been issued under this program.

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

At March 31, 2025, no borrowings were outstanding under this program, while at December 31, 2024, $435 million of commercial paper had been issued under this program.

DCP Midstream Class A Segment

On March 15, 2024, DCP LP terminated its $1.4 billion credit facility and its accounts receivable securitization facility that previously provided for up to $350 million of borrowing capacity.

At December 31, 2023, DCP LP had $25 million in borrowings outstanding under its $1.4 billion credit facility and $350 million of borrowings outstanding under its accounts receivable securitization facility, which were repaid during the three months ended March 31, 2024.

In conjunction with the termination of these facilities, DCP LP repaid $25 million in borrowings outstanding under its $1.4 billion credit facility and $350 million of borrowings outstanding under its accounts receivable securitization facility during the three months ended March 31, 2024.

Total Committed Capacity Available

At September 30, 2024 and December 31, 2023, we had approximately $5.3 billion and $6.4 billion, respectively, of total committed capacity available under the credit facilities described above.

On August 30, 2024, we sold our ownership interest in certain Midstream gathering and processing assets in Texas for $41 million and recognized a before-tax loss of $9 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the three and nine months ended September 30, 2024.

See Note 9—Properties, Plants and Equipment, in the Notes to Consolidated Financial Statements for further information.

On August 1, 2024, we sold our ownership interests in certain gathering and processing assets in Louisiana and Alabama for $173 million and recognized a before-tax gain of $18 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the three and nine months ended September 30, 2024, and is reported in the Midstream segment.

See Note 8—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information.

On June 14, 2024, we sold our 25% ownership interest in REX for $685 million and recognized a before-tax gain of $238 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the nine months ended September 30, 2024, and is reported in the Midstream segment.

See Note 8—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information.

On August 1, 2023, we sold our 25% ownership interest in the South Texas Gateway Terminal for approximately $275 million.

On February 28, 2023, we closed on the sale of the Belle Chasse Terminal for approximately $76 million.

Pending Investment Dispositions

On October 28, 2024, we entered into an agreement to sell our equity interests in certain pipeline and terminaling assets in North Dakota for total cash proceeds of approximately $140 million, which approximates the net book value of the assets being sold.

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

On October 14, 2024, we entered into a definitive agreement to sell our 49% non-operated equity interest in Coop Mineraloel AG (Coop) for cash proceeds of 1.06 billion Swiss francs (approximately $1.24 billion), consisting of a sales price of approximately 1.0 billion Swiss francs (approximately $1.17 billion) and an assumed dividend of 60 million Swiss francs (approximately $70 million) for 2024 to be paid at or prior to closing.

The sales price is subject to adjustment based on the amount of the dividend.

The transaction is subject to approval by the Swiss Competition Commission and is expected to close in the first quarter of 2025.

The net book value of our investment in Coop at September 30, 2024, was $152 million.

At March 31, 2025, and December 31, 2024, we had approximately $5.4 billion and $4.6 billion, respectively, of total committed capacity available under the credit facilities described above.

Investment Dispositions

On January 31, 2025, we sold our 49% ownership interest in Coop and settled the foreign currency forward contracts entered into in connection with the asset sale.

We received cash proceeds of $1.2 billion, consisting of a sales price of $1.15 billion and a final dividend relating to financial year 2024 of $92 million from Coop that was paid on January 30, 2025.

On January 30, 2025, DCP LP sold its 25% ownership interest in GCX for cash proceeds of $853 million.

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

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 September 30, 2024.

We have a residual value guarantee associated with the operating lease agreement with a maximum potential future exposure of $514 million at March 31, 2025.

We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $176 million.

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In February 2022, the U.S.

Supreme Court (the Court) denied Dakota Access’ writ of certiorari requesting the Court to review the trial court’s decision to order the EIS and vacate the easement.

Supreme Court (the Supreme Court) denied Dakota Access’ writ of certiorari requesting the Supreme Court to review the trial court’s decision to order the EIS and vacate the easement.

Therefore, the requirement to prepare the EIS stood.

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

In October 2024, the Tribe filed another lawsuit against the USACE in federal district court in Washington, D.C., again challenging USACE’s allowance of pipeline operations while the EIS process proceeds.

In this lawsuit, the Tribe purports to introduce new evidence regarding the pipeline’s proximity to a reservoir and attempts to relitigate arguments about the need for injunctive relief to support its position that the Supreme Court should halt pipeline operations.

A consortium of 13 states has joined Dakota Access as intervenors.

The consortium argues that the pipeline reduces pollution compared to other modes of transportation and that Dakota Access is integral to the health of regional energy and agriculture markets.

The Tribe’s prior request for a shutdown was denied in May 2021.

This latest lawsuit seeking a shutdown does not change the current deadline for the issuance of the final EIS.

Motions to Dismiss the latest lawsuit were filed by USACE, Dakota Access, and Intervenors and opposed by the Tribe.

The parties are awaiting the district court’s decision.

On March 19, 2025, the Tribe filed a notice in support of its latest lawsuit, indicating three additional facts for the district court to consider when making its ruling on the lawsuit.

These facts relate to events regarding Energy Transfer LP’s conduct and third-party actions against it.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access.

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

At March 31, 2025, 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 September 30, 2024, our 25% share of the maximum potential equity contributions under the CECU was approximately $215 million.

At March 31, 2025, 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 $10 million annually, in addition to the potential obligations under the CECU at September 30, 2024.

See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding our investments in Dakota Access and ETCO.

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 September 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 September 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.

On March 4, 2024, Phillips 66 Company repaid $700 million of the $1.25 billion borrowed under its delayed draw term loan that matures in June 2026.

On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900% senior notes due February 2024 with an aggregate principal amount of $800 million.

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.

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 nine months ended September 30, 2024 and September 30, 2023, DCP LP made cash distributions of $36 million and $113 million, respectively, to common unit holders other than Phillips 66 and its subsidiaries.

Midstream Acquisition

On July 1, 2024, we acquired Pinnacle Midstream to expand our natural gas gathering and processing operations in the Permian Basin for total cash consideration of $567 million.

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

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

On October 11, 2024, our Board of Directors declared a quarterly cash dividend of $1.15 per common share.

This dividend is payable on December 2, 2024, to shareholders of record as of the close of business on November 18, 2024.

Our debt balance at March 31, 2025, and December 31, 2024, was $18.8 billion and $20.1 billion, respectively.

Our total debt-to-capital ratio was 40% and 41% at March 31, 2025, and December 31, 2024, respectively.

On February 18, 2025, upon maturity, Phillips 66 Partners repaid its 3.605% Senior Notes due February 2025 with an aggregate principal amount of $59 million.

Subsequent Midstream Acquisition

This acquisition was funded with cash and borrowings under our short-term liquidity facilities.

On February 12, 2025, our Board of Directors declared a quarterly cash dividend of $1.15 per common share.

This dividend was paid on March 5, 2025, to holders of record at the close of business on February 24, 2025.

On April 21, 2025, our Board of Directors declared a quarterly cash dividend of $1.20 per common share.

This dividend is payable on June 2, 2025, to shareholders of record as of the close of business on May 19, 2025.

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 nine months ended September 30, 2024, we repurchased 19.5 million shares at an aggregate cost of approximately $2.8 billion.

For the three months ended March 31, 2025, we repurchased 2 million shares at an aggregate cost of approximately $0.2 billion.

Since July 2012, we have repurchased 240 million shares under our share repurchase program at an aggregate cost of $21.8 billion.

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Employee Benefit Plan Contributions

During the nine months ended September 30, 2024, we contributed $22 million to our U.S.

During the three months ended March 31, 2025, we contributed $49 million to our U.S.

pension and other postretirement benefit plans and $1 million to our international pension plans.

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Millions of Dollars

Nine Months Ended

Three Months Ended March 31

Capital Expenditures and Investments

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CPChem 182 201

* In the third quarter of 2024, we began presenting the line item “Capital expenditures and investments” on our consolidated statement of cash flows exclusive of acquisitions, net of cash acquired, and purchases of government obligations.

Prior period information has been reclassified for comparability.

Acquisitions, net of cash acquired, were $567 million and $263 million for the nine months ended September 30, 2024 and 2023, respectively.

Purchases of government obligations were $1.1 billion for the nine months ended September 30, 2024.

* Our share of joint ventures’ capital spending.

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

• Funding the expansion of our natural gas gathering and processing operations in the Permian Basin.

• 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 nine months of 2024, on a 100% basis, CPChem’s capital expenditures and investments were $1.2 billion.

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

During the first three months of 2025, capital spending in our Midstream segment was $216 million and included:

• Continued development of a second Dos Picos gas plant, further expanding our operations in the Permian Basin.

• Gathering and processing projects to further align our wellhead-to-market strategy.

• Spending associated with other reliability and maintenance projects in our Transportation and NGL businesses.

During the first three months of 2025, on a 100% basis, CPChem’s capital expenditures and investments were $363 million.

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

Gulf Coast and in the Middle East, as well as sustaining, debottlenecking and optimization projects on existing assets.

CPChem’s capital program was self-funded, and we expect CPChem to continue self-funding its capital program for the remainder of 2025.

Capital spending for the Refining segment during the first nine 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:

• Installation of facilities to improve market capture at our refineries, as well as the jointly owned Wood River and Borger refineries.

• Capital spending to improve reliability at our refineries, as well as the jointly owned Wood River and Borger refineries.

Capital spending for the Refining segment during the first three months of 2025 was $176 million.

Major capital activities included installation of facilities to improve market capture at our refineries and capital spending to improve reliability at our refineries.

Marketing and Specialties

Capital spending for the M&S segment during the first nine 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.

Capital spending for the M&S segment during the first three months of 2025 was $15 million, primarily for the continued development and enhancement of retail sites in Europe, marketing-related information technology enhancements, spend associated with marketing and commercial fleet fueling businesses on the U.S.

West Coast, and reliability and maintenance projects for our Specialties business.

Renewable Fuels

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

Capital spending for the Renewable Fuels segment during the first three months of 2025 was $9 million.

The capital spending was focused on increasing reliability, debottlenecking opportunities and improving feed flexibility on existing assets.

Corporate and Other

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

Capital spending for Corporate and Other during the first three months of 2025 was $7 million, primarily related to information technology.

Contingencies

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We regularly assess the need for financial recognition or disclosure of these contingencies.

In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount of loss is reasonably estimable.

In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable.

If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued.

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Legal and Tax Matters

Our legal and tax matters are handled by our legal and tax organizations.

Our legal and tax matters are handled by our legal and tax organizations, respectively.

These organizations apply their knowledge, experience and professional judgment to the specific characteristics of our cases and uncertain tax positions.

We employ a litigation management process to manage and monitor the legal proceedings.

We employ a litigation management process to manage and monitor legal proceedings.

Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation.

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Ultimately, the parties were not able to reach an agreement and negotiations were terminated in August 2018.

On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence.

On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence.

On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding.

In 2025, the Court is expected to rule on motions anticipated to be filed by Propel Fuels seeking exemplary damages and attorneys’ fees.

Phillips 66 Company expects that Propel Fuels will ask the Court to grant treble damages.

Also in 2025, the Court is expected to rule on Phillips 66 Company’s motions for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial.

In 2025, the Propel Court is expected to rule on motions filed by Propel Fuels seeking exemplary damages and attorneys’ fees.

Propel Fuels asked the Propel Court to grant treble damages and Phillips 66 Company filed a brief in opposition to that request.

A hearing on the exemplary damages was held on March 4, 2025.

Also in 2025, the Propel Court is expected to rule on motions to be filed by Phillips 66 Company for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial.

Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position.

As a result of the jury verdict, the Company has recorded an accrual of $604.9 million which is included in the “Selling, general and administrative expenses” line on our consolidated statement of income for the three and nine months ended September 30, 2024, and is reported in the M&S segment.

In addition, the accrued amount is reflected as “Other liabilities and deferred credits” on our consolidated balance sheet as of September 30, 2024.

As a result of the jury verdict in October 2024, the Company recorded an accrual of $604.9 million during the third quarter of 2024, which was reported in the M&S segment.

The accrued amount is reflected as “Other liabilities and deferred credits” on our consolidated balance sheet as of March 31, 2025, and December 31, 2024.

However, it is reasonably possible that the estimate of the loss could change based on the progression of the case, including the appeals process.

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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 nine months ended September 30, 2024 and 2023, we incurred expenses of $23 million and $242 million, respectively, associated with our obligation to purchase RINs in the open market to comply with the RFS for our wholly owned refineries.

For the three months ended March 31, 2025, we were able to fully satisfy our obligations under the RFS through blending renewable fuels into the motor fuel we produce.

For the three months ended March 31, 2024, we incurred expenses of $93 million 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 $180 million and $326 million for the nine months ended September 30, 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 $74 million and $59 million for the three months ended March 31, 2025 and 2024, respectively.

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

The amount of these expenses and fluctuations between periods is primarily driven by the market price of RINs, refinery production, blending activities and renewable volume obligation requirements.

The amount of these expenses and fluctuations between periods is primarily driven by the market price of RINs, refinery and renewable fuels production, blending activities and renewable volume obligation requirements.

We occasionally receive requests for information or notices of potential liability from the Environmental Protection Agency (EPA) and state environmental agencies alleging that we are a potentially responsible party under the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or an equivalent state statute.

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

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

At March 31, 2025, and December 31, 2024, we reported that we had been notified of potential liability under CERCLA and comparable state laws at 19 sites within the United States and Puerto Rico.

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 September 30, 2024, $14.7 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

At March 31, 2025, $14.4 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 nine months ended September 30, 2024, and the summarized financial position at September 30, 2024 and December 31, 2023, for the Obligor Group on a combined basis were:

Summarized Combined Statement of Income Millions of Dollars

Nine Months Ended September 30, 2024

The summarized results of operations for the three months ended March 31, 2025, and the summarized financial position at March 31, 2025, and December 31, 2024, for the Obligor Group on a combined basis were:

Summarized Combined Statement of Loss Millions of Dollars

Three Months Ended March 31, 2025

Sales and other operating revenues 22,482

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Purchased crude oil and products—non-guarantor subsidiaries 6,037

Income before income taxes 164

Net income 189

Loss before income taxes (1,385)

Net loss (1,073)

Summarized Combined Balance Sheet Millions of Dollars

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Coast Worldwide

Three Months Ended September 30, 2024

Income (loss) before income taxes $ (61) (102) 308 (253) (108)

Taxes other than income taxes 24 26 27 23 100

Depreciation, amortization and impairments 53 69 41 67 230

Selling, general and administrative expenses 14 8 27 11 60

Operating expenses 253 304 124 241 922

Equity in (earnings) losses of affiliates 2 (1) 11 — 12

Other segment (income) expense, net (25) 6 8 7 (4)

Proportional share of refining gross margins contributed by equity affiliates

21 — 172 — 193

Realized refining margins $ 281 310 718 96 1,405

Total processed inputs ( thousands of barrels )

47,819 48,609 27,025 21,987 145,440

Adjusted total processed inputs ( thousands of barrels )*

47,819 48,609 50,536 21,987 168,951

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

$ (1.27) (2.10) 11.38 (11.51) (0.74)

Realized refining margins ( dollars per barrel )***

5.87 6.39 14.19 4.34 8.31

Three Months Ended September 30, 2023

Income before income taxes $ 406 364 367 575 1,712

Three Months Ended March 31, 2025

Loss before income taxes $ (199) (333) (50) (355) (937)

Taxes other than income taxes 22 35 26 27 110

13 28 23 26 90

Depreciation, amortization and impairments 56 72 41 287 456

53 62 41 54 210

Selling, general and administrative expenses 6 9 23 8 46

Operating expenses 373 381 148 172 1,074

252 286 222 348 1,108

Equity in (earnings) losses of affiliates 2 (1) (209) — (208)

Equity in losses of affiliates 2 — 103 — 105

Other segment (income) expense, net (6) 1 (12) 12 (5)

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Realized refining margins $ 275 165 399 151 990

$ 757 744 901 996 3,398

Total processed inputs ( thousands of barrels )

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38,716 37,206 48,275 21,362 145,559

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

Loss before income taxes per barrel ( dollars per

$ (5.15) (8.95) (1.85) (16.60) (7.53)

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7.08 4.43 8.29 7.12 6.81

* Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate.

** Income (loss) 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

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

Income (loss) before income taxes $ 78 120 213 (195) 216

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Selling, general and administrative expenses

29 23 76 21 149

Operating expenses

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46,911 47,492 47,912 23,639 165,954

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

$ 0.22 0.41 9.47 (6.64) 0.93

Realized refining margins ( dollars per barrel )***

7.88 8.38 13.18 9.34 9.77

Nine Months Ended September 30, 2023

Income before income taxes $ 666 1,406 1,732 677 4,481

Taxes other than income taxes

53 86 74 84 297

Depreciation, amortization and impairments

156 184 118 159 617

Selling, general and administrative expenses

30 13 56 15 114

Operating expenses

852 821 545 979 3,197

Equity in (earnings) losses of affiliates 6 (2) (528) — (524)

Other segment (income) expense, net 34 17 34 (10) 75

Proportional share of refining gross margins contributed by equity affiliates

71 — 1,109 — 1,180

Realized refining margins

$ 1,868 2,525 3,140 1,904 9,437

Total processed inputs ( thousands of barrels )

130,984 154,735 77,616 88,968 452,303

Adjusted total processed inputs ( thousands of barrels )*

130,984 154,735 138,027 88,968 512,714

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

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The realized marketing fuel margins are adjusted to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized marketing fuel margins are converted to a per-barrel basis by dividing them by sales volumes measured on a barrel basis.

We believe realized marketing fuel margin per barrel demonstrates the value uplift our marketing operations provide by optimizing the placement and ultimate sale of our refineries’ fuel production.

Within the M&S segment, the GAAP performance measure most directly comparable to realized marketing fuel margin per barrel is the marketing business’ “income (loss) before income taxes per barrel.” Realized marketing fuel margin per barrel excludes items that are typically included in gross margin, such as depreciation and operating expenses, and other items used to determine income (loss) before income taxes, such as general and administrative expenses.

We believe realized marketing fuel margin per barrel demonstrates the value uplift our marketing operations provide by optimizing the placement and ultimate sale of our facilities’ fuel production.

Within the M&S segment, the GAAP performance measure most directly comparable to realized marketing fuel margin per barrel is the marketing business’ “income before income taxes per barrel.” Realized marketing fuel margin per barrel excludes items that are typically included in gross margin, such as depreciation and operating expenses, and other items used to determine income before income taxes, such as general and administrative expenses.

Because realized marketing fuel margin per barrel excludes these items, and because realized marketing fuel margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool.

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Three Months Ended

September 30, 2024 Three Months Ended

September 30, 2023

International U.S.

International

Realized Marketing Fuel Margins

Income (loss) before income taxes $ (262) 143 435 122

Depreciation and amortization 9 20 5 18

Selling, general and administrative expenses 823 64 216 63

Equity in earnings of affiliates (10) (30) (18) (32)

Other operating revenues* (127) (11) (133) (1)

Other expense, net 14 2 7 4

Marketing margins 447 188 512 174

margin for nonfuel related sales — 14 — 13

Realized marketing fuel margins $ 447 174 512 161

Total fuel sales volumes ( thousands of barrels )

182,823 28,207 179,432 29,080

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

$ (1.43) 5.07 2.42 4.20

Realized marketing fuel margins ( dollars per barrel )**

2.45 6.19 2.85 5.55

* 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

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

March 31, 2025 Three Months Ended

March 31, 2024

International U.S.

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Special items:

Net gain on asset disposition — (1,017) — —

Legal settlement — — (59) —

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1.36 4.87 1.60 4.88

* Includes other nonfuel revenues.

* Includes other nonfuel revenues and expenses.

** 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.

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CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

You can normally identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions that convey the prospective nature of events or outcomes, but the absence of such words does not mean a statement is not forward-looking.

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the Act).

You can normally identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “priorities” and similar expressions that convey the prospective nature of events or outcomes, but the absence of such words does not mean a statement is not forward-looking.

We based these forward-looking statements on our current expectations, estimates and projections about us, our operations, our joint ventures and entities in which we have equity interests, as well as the industries in which we and they operate, and our sustainability-related plans and goals.

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The information included in, and any issues identified as material for purposes of, our sustainability reports shall not be considered material for U.S.

Securities and Exchange Commission (SEC) reporting purposes.

Securities and Exchange Commission reporting purposes.

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

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• 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 the Organization of Petroleum Exporting Countries (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 synergies.

• Actions taken by Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries impacting crude oil production and correspondingly, commodity prices.

• Unexpected changes in costs or technical requirements for constructing, modifying or operating our facilities or transporting our products.

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• Our ability to realize sustained savings and cost reductions from the company’s business transformation initiatives.

• 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, expropriation of assets and changes in fiscal policy, including interest rates.

• Changes to government policies relating to renewable fuels, climate change and GHG 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 war in Eastern Europe, 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.

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• Damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks.

• Our ability to meet our sustainability goals, including reducing our GHG emissions intensity, developing and protecting new technologies, and commercializing lower-carbon opportunities.

• Our sustainability goals, including reducing our GHG emissions intensity, developing and protecting new technologies, and commercializing lower-carbon opportunities.

• Failure of new products and services to achieve market acceptance.

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• Changes in tax, environmental and other laws and regulations (including alternative energy mandates) applicable to our business.

• Economic, political and regulatory conditions domestically and internationally, including imposition of tariffs or other tax incentives or disincentives.

• Political and societal concerns about climate change that could result in changes to our business or operations or increase expenditures, including litigation-related expenses.

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• The operation, financing and distribution decisions of our joint ventures that we do not control.

• The potential impact of activist shareholder actions or tactics.

• The factors generally described in Item 1A.—Risk Factors in our 2024 Annual Report on Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our commodity price risk and interest rate risk at September 30, 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 March 31, 2025, did not differ materially from the risks disclosed under Item 7A of our 2024 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