What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-07-28 · 239 added, 183 removed, 690 unchanged (38% of the section changed)

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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 June 30, 2025, we had total assets of $75.9 billion.

At September 30, 2025, we had total assets of $76.1 billion.

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

Executive Overview

In the second quarter of 2025, we reported earnings of $877 million and cash provided by operating activities of $845 million.

During the quarter, we funded capital expenditures and investments of $587 million and an acquisition of $2.2 billion, net of cash acquired.

Additionally, we received $2.4 billion from net debt borrowings, paid $419 million to repurchase shares of our common stock and paid $487 million of dividends to our common stockholders.

We ended the second quarter of 2025 with $1.1 billion of cash and cash equivalents and $3.7 billion of total committed capacity available under our credit facilities.

In the third quarter of 2025, we reported earnings of $133 million and cash provided by operating activities of $1.2 billion.

During the quarter, we received $838 million from net debt borrowings, funded capital expenditures and investments of $541 million, paid $484 million of dividends to our common stockholders and repurchased $267 million of common stock.

We ended the third quarter of 2025 with $2 billion of cash and cash equivalents including cash classified within assets held for sale, and $5.2 billion of total committed capacity available under our credit facilities.

Strategic Priorities Update

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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 and July 2025, our Board of Directors declared quarterly cash dividends of $1.20 per common share, reflecting our commitment to a secure, competitive and growing dividend.

• In April, July, and October 2025, our Board of Directors declared quarterly cash dividends of $1.20 per common share, 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.

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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.

• On May 15, 2025, we entered into a definitive agreement to divest 65% of our equity interest in our Germany and Austria retail marketing business (Germany and Austria Marketing) for expected cash proceeds of approximately $1.6 billion (1.5 billion Euros), subject to purchase price adjustments for working capital and certain long-term liabilities on the closing date.

We will retain a 35% non-operating equity interest in Germany and Austria Marketing through a joint venture, which will be formed prior to the closing of the transaction.

We expect to complete this transaction in the second half of 2025, subject to regulatory approvals and other customary closing conditions.

• 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.

• During 2025, we funded capital expenditures and investments of $1.6 billion and completed a Midstream acquisition of $2.2 billion.

This growth was achieved in part through $2.0 billion in proceeds from asset dispositions, including $1.2 billion from the sale of our 49% interest in Coop Mineraloel AG (Coop) and $853 million from DCP Midstream, LP’s (DCP LP) 25% ownership in Gulf Coast Express Pipeline LLC (GCX).

Also, in May 2025, we entered into a definitive agreement to divest 65% of our equity interest in our Germany and Austria retail marketing business (Germany and Austria Marketing) for expected cash proceeds of approximately $1.6 billion (1.5 billion Euros), subject to purchase price adjustments.

We expect to complete the Germany and Austria Marketing transaction in the fourth quarter of 2025, subject to customary closing conditions.

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

See Note 23—Assets Held for Sale, in the Notes to Consolidated Financial Statements for additional information.

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

We budgeted $2.1 billion for 2025 capital expenditures and investments, exclusive of acquisitions and our share of capital spending by equity affiliates.

This includes $1.1 billion of growth capital, primarily in our Midstream segment and additional capital related to consolidation of WRB as of October 1, 2025.

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

• We continued expansion of our Midstream NGL wellhead-to-market platform through acquiring all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP (collectively referred to herein as Coastal Bend), together with their respective subsidiaries, which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems.

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

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

• Our financial targets through 2027 reflect our plans to organically grow our Midstream and Chemicals businesses, as well as maintain total annual capital expenditures and investments of approximately $2.5 billion, including capital related to consolidation of WRB as of October 1, 2025.

• 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.

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Our NGL business, including DCP Midstream Class A Segment, DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills 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 second quarter of 2025, compared with $0.68 per gallon during the second quarter of 2024.

The Henry Hub natural gas price was $3.16 per million British thermal units (MMBtu) during the second quarter of 2025, compared with $2.04 per MMBtu during the second quarter of 2024.

The decrease in NGL prices was primarily due to lower crude oil prices, while the increase in natural gas prices was due to increased liquified natural gas exports.

The weighted-average NGL price was $0.60 per gallon during the third quarter of 2025, compared with $0.64 per gallon during the third quarter of 2024.

The Henry Hub natural gas price was $3.03 per million British thermal units (MMBtu) during the third quarter of 2025, compared with $2.09 per MMBtu during the third quarter of 2024.

The decrease in NGL prices was primarily due to increased supply, while the improvement in natural gas prices was due to increased liquified natural gas exports as U.S.

export infrastructure increases.

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 was 7.4 cents per pound in the second quarter of 2025, compared with 18.3 cents per pound in the second quarter of 2024.

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

The benchmark high-density polyethylene chain margin was 7.6 cents per pound in the third quarter of 2025, compared with 23.7 cents per pound in the third quarter of 2024.

The decrease was mainly due to higher ethane prices and industry oversupply driven by capacity additions.

Our Refining segment results are driven by several factors, including market crack spreads, refinery throughput, feedstock costs, product yields, turnaround activity and other operating costs.

Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil.

The composite 3:2:1 market crack spread for our business increased to an average of $21.65 per barrel during the second quarter of 2025, from an average of $18.96 per barrel during the second quarter of 2024.

The increase in the composite market crack spread was primarily driven by stronger year on year petroleum diesel demand, which has resulted in low seasonal inventories.

The composite 3:2:1 market crack spread for our business increased to an average of $23.64 per barrel during the third quarter of 2025, from an average of $16.50 per barrel during the third quarter of 2024.

The increase in the composite market crack spread was primarily driven by stronger year on year petroleum diesel demand, supported by low seasonal inventories.

The price of U.S.

benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, decreased to an average of $63.86 per barrel during the second quarter of 2025, from an average of $80.73 per barrel during the second quarter of 2024, primarily due to increased supply.

benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, decreased to an average of $65.03 per barrel during the third quarter of 2025, from an average of $75.19 per barrel during the third quarter of 2024, primarily due to increasing supply.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined products.

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RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2025, is based on a comparison with the corresponding period of 2024.

Unless otherwise indicated, discussion of results for the three and nine months ended September 30, 2025, is based on a comparison with the corresponding period of 2024.

Consolidated Results

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2025 2024 2025 2024

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Net income attributable to Phillips 66 $ 133 346 1,497 2,109

Net income attributable to Phillips 66 in the second quarter of 2025 was $877 million, compared with $1,015 million in the second quarter of 2024.

Net income attributable to Phillips 66 for the six months ended June 30, 2025, was $1,364 million, compared with $1,763 million for the six months ended June 30, 2024.

The decrease in net income attributable to Phillips 66 in the second quarter of 2025, was due to accelerated depreciation for the Los Angeles Refinery, lower equity earnings from CPChem and a gain on the sale of our ownership interest in Rockies Express Pipeline LLC (REX) that was recognized in 2024.

These decreases were partially offset by higher U.S.

and international marketing fuel margins, improved realized refining margins, primarily driven by higher market crack spreads, and a before-tax impairment of certain Midstream assets recognized in 2024.

The decrease in net income attributable to Phillips 66 the six months ended June 30, 2025, was due to lower realized refining margins, accelerated depreciation for the Los Angeles Refinery, and the gain on sale of our ownership interest in REX recognized in the second quarter of 2024, partially offset by a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in January 2025 and the before-tax impairment of certain Midstream assets recognized in the second quarter of 2024.

See the “Segment Results” section for additional information on our segment results and Note 21—Income Taxes, in the Notes to Consolidated Financial Statements for additional information on income taxes.

Net income attributable to Phillips 66 in the third quarter of 2025 was $133 million, compared with $346 million in the third quarter of 2024.

Net income attributable to Phillips 66 for the nine months ended September 30, 2025, was $1.5 billion, compared with $2.1 billion for the nine months ended September 30, 2024.

The decrease in net income attributable to Phillips 66 in the third quarter of 2025 was due to a before-tax impairment of $948 million on our equity investment in WRB Refining LP (WRB), accelerated depreciation for the Los Angeles Refinery, and lower equity earnings from CPChem.

These decreases were partially offset by improved realized refining margins, primarily driven by higher market crack spreads, lower legal accruals related to litigation with Propel Fuels, Inc.

(Propel Fuels) recorded in the M&S segment and higher refining volumes.

The decrease in net income attributable to Phillips 66 for the nine months ended September 30, 2025, was due to a before-tax impairment of $948 million on our equity investment in WRB, accelerated depreciation for the Los Angeles Refinery, and lower equity earnings from CPChem and WRB.

These decreases were partially offset by a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in January 2025 in the M&S segment, lower legal accruals related to litigation with Propel Fuels and before-tax impairments recognized in 2024 related to certain crude oil processing and logistics assets in California and certain Midstream gathering and processing assets in Texas.

See Note 2—Restructuring for additional information regarding our plans to cease operations and begin idling the facilities at our Los Angeles Refinery, Note 7—Investments, Loans and Long-Term Receivables for additional information regarding the impairment of our equity investment in WRB and sale of our investment in Coop, Note 9—Impairments for additional information on 2024 impairments and Note 13—Contingencies and Commitments for additional information on ongoing litigation with Propel Fuels, in the Notes to Consolidated Financial Statements.

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

Statement of Income Analysis

Sales and other operating revenues decreased 13% and 14% for the three and six months ended June 30, 2025, respectively.

Purchased crude oil and products decreased 16% and 15% for the three and six months ended June 30, 2025, respectively.

The decreases in both line items for the three months ended June 30, 2025, were due to lower prices for crude oil and refined petroleum products, as well as reduced marketing volumes, partially offset by higher refining volumes.

The decreases in both line items for the six months ended June 30, 2025, were due to lower prices for crude oil and refined petroleum products.

Equity in earnings of affiliates decreased 69% and 70% for the three and six months ended June 30, 2025, respectively.

The decreases for both periods of 2025 were primarily attributable to lower equity earnings from CPChem, as well as lower equity earnings from sales of ownership interests in REX, Coop and GCX.

The decrease for the six months ended June 30, 2025, was additionally impacted by lower equity earnings from WRB, as a result of decreased margins.

Sales and other operating revenues decreased 3% and 10% for the three and nine months ended September 30, 2025, respectively.

Purchased crude oil and products decreased 6% and 12% for the three and nine months ended September 30, 2025, respectively.

The decreases in both line items for the three and nine months ended September 30, 2025, were due to lower prices for crude oil, NGL, and refined petroleum products, partially offset by higher volumes.

Equity in earnings of affiliates decreased 39% and 59% for the three and nine months ended September 30, 2025, respectively.

The decreases for both periods of 2025 were primarily attributable to lower equity earnings from CPChem, as well as lower equity earnings from sales of ownership interests in Coop and GCX which were both sold in January 2025.

The decrease for the three months ended September 30, 2025, was partially offset by improved WRB equity earnings, as a result of improved margins and utilization.

The decrease for the nine months ended September 30, 2025, was additionally impacted by lower equity earnings from WRB, as a result of decreased margins, and lower equity earnings from the sale of our ownership interest in Rockies Express Pipeline LLC (REX) in 2024.

See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the sales of ownership interests in 2025.

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

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

We had a net loss on dispositions of $93 million for the second quarter of 2025, compared with a net gain on dispositions of $237 million in the second quarter of 2024.

The decrease for the three months ended June 30, 2025, was due to a before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024 associated with the sale of our 25% ownership interest in REX, compared with a before-tax loss primarily associated with an aggregate unrealized loss of $89 million on foreign currency forward contracts entered into in connection with the pending divestiture of 65% of Germany and Austria Marketing recognized in the second quarter of 2025.

Our net gain on dispositions increased $757 million for the six months ended June 30, 2025.

The increase for the six months ended June 30, 2025, was 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 in 2025, partially offset by the before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024.

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

See Note 23—Assets Held for Sale or Sold, in the Notes to Consolidated Financial Statements for additional information on the Germany and Austria Marketing pending divestiture.

Other income increased $81 million and $40 million for the three and six months ended June 30, 2025, respectively.

The increase for the three months ended June 30, 2025, was primarily due to the recognition of Clean Fuel Production credits starting in 2025, as well as higher results from trading activities.

The increase for the six months ended June 30, 2025, was primarily due to the recognition of Clean Fuel Production credits starting in 2025, partially offset by changes in the fair value of our investment in NOVONIX.

Operating expenses increased 2% and 7% for the three and six months ended June 30, 2025, respectively.

The increase in the three months ended June 30, 2025, was primarily due to maintenance activity in the Midstream segment, partially offset by lower turnaround activity in the Refining segment.

The increase in the six months ended June 30, 2025, was primarily due to higher turnaround activity in the Refining segment and increased maintenance activity in the Midstream segment.

Depreciation and amortization increased 64% and 61% for the three and six months ended June 30, 2025, respectively, primarily due to $239 million and $485 million of accelerated depreciation for the Los Angeles Refinery, respectively, as well as depreciation from the recent acquisition of Coastal Bend.

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

See Note 3—Business Combinations, in the Notes to Consolidated Financial Statements for information regarding the Coastal Bend acquisition.

Impairments decreased $221 million and $360 million for the three and six months ended June 30, 2025, respectively.

The decreases for both periods of 2025 were due to before-tax impairments of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas.

The decrease for the six months ended June 30, 2025, also included $163 million of before-tax impairments recognized 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.

Taxes other than income taxes increased $169 million and $237 million for the three and six months ended June 30, 2025, respectively.

The increases for both periods in 2025 were primarily driven by the expiration of the Biodiesel Blender Tax Credit as of December 31, 2024, as well as increased property taxes on certain Midstream assets.

The increase for the six months ended June 30, 2025, was also impacted by an increase in taxes related to feedstock imports at the Rodeo Complex.

Interest and debt expense increased 14% and 6% for the three and six months ended June 30, 2025, respectively, primarily due to debt issuances related to an asset acquisition.

Income tax expense decreased 27% and 32% for the three and six months ended June 30, 2025, respectively, primarily due to lower income before income taxes.

Net gain on dispositions increased $766 million for the nine months ended September 30, 2025, primarily due to a before-tax gain of $1 billion associated with the sale of our investment in Coop in January 2025, recognized in the M&S segment.

This gain was partially offset by the absence of a before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024 associated with the sale of our ownership interest in REX, as well as an unrealized loss of $74 million on foreign currency forward contracts entered into in connection with the pending divestiture of Germany and Austria Marketing.

See Note 7—Investments, Loans and Long-Term Receivables for additional information regarding the sale of Coop and Note 23—Assets Held for Sale for additional information on the Germany and Austria Marketing pending divestiture, in the Notes to Consolidated Financial Statements.

Other income increased $32 million and $72 million for the three and nine months ended September 30, 2025, respectively.

The increases for both periods of 2025 were primarily due to the recognition of Clean Fuel Production credits starting in 2025.

The increase for the nine months ended September 30, 2025, was partially offset by changes in the fair value of our investment in NOVONIX, as well as decreased interest income.

Operating expenses increased $196 million for the nine months ended September 30, 2025, primarily due to environmental expenses related to future groundwater mitigation plans at the Los Angeles Refinery, costs associated with the acquisition of Coastal Bend in April 2025, as well as higher compensation and utility expenses.

Selling, general and administrative expenses decreased 34% and 18% for the three and nine months ended September 30, 2025, respectively, primarily due to lower legal accruals related to litigation with Propel Fuels.

See Note 13—Contingencies and Commitments for additional information on ongoing litigation with Propel Fuels.

Depreciation and amortization increased 52% and 58% for the three and nine months ended September 30, 2025, respectively, primarily due to accelerated depreciation for the Los Angeles Refinery, as well as additional depreciation from the acquisition of Coastal Bend in April 2025.

See Note 2—Restructuring for information regarding our plans to cease operations and begin idling the facilities at our Los Angeles Refinery and Note 3—Business Combinations for information regarding the Coastal Bend acquisition, in the Notes to Consolidated Financial Statements.

Impairments increased $922 million and $562 million for the three and nine months ended September 30, 2025, respectively.

The increases for both periods of 2025 were due to the before-tax impairment of $948 million recognized in the third quarter of 2025 related to our equity investment in WRB.

The increase for the nine months ended September 30, 2025, was partially offset by a before-tax impairment of $163 million recognized in the first quarter of 2024 related to certain crude oil processing and logistics assets in California and a before-tax impairment of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas.

See Note 7—Investments, Loans and Long-Term Receivables for additional information regarding the impairment of our equity investment in WRB and Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information.

Taxes other than income taxes increased $168 million and $405 million for the three and nine months ended September 30, 2025, respectively.

The increases for both periods in 2025 were primarily driven by the expiration of the Biodiesel Blender Tax Credit as of December 31, 2024.

The increase for the nine months ended September 30, 2025, was also impacted by an increase in tariffs and customs duties.

Interest and debt expense increased 13% and 8% for the three and nine months ended September 30, 2025, respectively, primarily due to higher average debt balances.

Income tax expense decreased 27% and 32% for the three and nine months ended September 30, 2025, respectively, primarily due to lower income before income taxes.

See Note 21—Income Taxes, in the Notes to Consolidated Financial Statements for information regarding our effective income tax rates.

Net income attributable to noncontrolling interests increased $26 million and $52 million for the three and six months ended June 30, 2025, respectively.

The increase in the three months ended June 30, 2025, is due to higher results from DCP LP primarily driven by before-tax impairments of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas.

The increase for the six months ended June 30, 2025, was also due to impacts from the gain on sale of DCP LP’s investment in GCX in January 2025.

See Note 7—Investments, Loans and Long-Term Receivables and Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding the sale of GCX and the before-tax impairments recorded in 2024, respectively.

Net income attributable to noncontrolling interests increased $63 million for the nine months ended September 30, 2025, due to improved results from DCP LP driven by before-tax impairments recognized in 2024 related to certain DCP LP gathering and processing assets in Texas, as well as impacts from the gain on sale of DCP LP’s equity investment in GCX in January 2025.

See Note 7—Investments, Loans and Long-Term Receivables and Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information.

Segment Results

Three Months Ended

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September 30 Nine Months Ended

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and condensate recovery.

Results from our Midstream segment decreased $36 million and increased $161 million for the three and six months ended June 30, 2025, respectively.

Results from our Transportation business decreased $305 million and $306 million for the three and six months ended June 30, 2025, respectively, primarily due to the sale of our ownership interest in the REX in the second quarter of 2024.

Results from our NGL business increased $269 million and $467 million for the three and six months ended June 30, 2025, respectively.

The increases for both periods of 2025 were primarily due to before-tax impairment charges associated with certain gathering and processing assets in Texas recognized in 2024 and results from the recently acquired Coastal Bend operations.

In addition, the six months ended June 30, 2025, reflected benefits from the sale of DCP LP’s ownership interest in GCX in January 2025, improved export margins, and increased gathering and processing activity in the Permian region associated with our acquisition of Dos Picos.

Results from our Midstream segment increased $53 million and $214 million for the three and nine months ended September 30, 2025, respectively.

Results from our Transportation business decreased $60 million and $366 million for the three and nine months ended September 30, 2025, respectively.

The decreases for both periods of 2025 were primarily due to the retirement of a rail rack at the Los Angeles Refinery and lower equity earnings primarily from Dakota Access, LLC.

Additionally, the decrease in the nine months ended September 30, 2025, was impacted by the sale of our ownership interest in REX in the second quarter of 2024.

Results from our NGL business increased $113 million and $580 million for the three and nine months ended September 30, 2025, respectively.

The increase in the three months ended September 30, 2025, is primarily due to results from the Coastal Bend operations, increased gathering and processing volumes and improved export margins.

The increase in the nine months ended September 30, 2025, is primarily related to a before-tax impairment charge associated with certain gathering and processing assets in Texas recognized in 2024, results from the Coastal Bend operations, and a before-tax gain from the sale of DCP LP’s ownership interest in GCX in January 2025.

In addition, the nine months ended September 30, 2025, reflected improved export margins and fewer weather-related impacts.

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

See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the sales of ownership interests in 2025.

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September 30 Nine Months Ended

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

Results from the Chemicals segment decreased $202 million and $294 million for the three and six months ended June 30, 2025, respectively.

The decrease in the three months ended June 30, 2025, was primarily driven by lower polyethylene margins due to lower sales prices and higher feedstock costs.

The decrease in the six months ended June 30, 2025, was primarily due to decreased polyethylene margins driven by lower sales prices.

Results from the Chemicals segment decreased $166 million and $460 million for the three and nine months ended September 30, 2025, respectively, primarily due to decreased polyethylene margins, mostly driven by lower sales prices.

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

Three Months Ended

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September 30 Nine Months Ended

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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.

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

On September 9, 2025, we entered into a definitive agreement to acquire the remaining 50% ownership interest in WRB from subsidiaries of Cenovus Energy Inc.

The transaction closed on October 1, 2025, for total cash consideration of $1.3 billion, subject to post-closing adjustments.

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

In October 2024, we announced our intention to cease operations and begin idling the facilities at our Los Angeles Refinery in the fourth quarter of 2025.

In the third quarter of 2025, we began the permitting processes for new uses at the Los Angeles Refinery.

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

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Operating Statistics 2025 2024 2025 2024

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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 increased $57 million and decreased $1,096 million for the three and six months ended June 30, 2025, respectively.

The increase in the three months ended June 30, 2025, was primarily driven by improved realized margins, higher volumes and lower operating costs, partially offset by accelerated depreciation for the Los Angeles Refinery.

The increase in realized margins was primarily due to higher market crack spreads, partially offset by lower product differentials.

The decrease in the six months ended June 30, 2025, was primarily driven by lower realized margins resulting from declining market crack spreads and reduced product differentials, as well as accelerated depreciation for the Los Angeles Refinery.

Our worldwide refining crude oil capacity utilization rate was 98% and 89% for the three and six months ended June 30, 2025, respectively, compared with 98% and 95% in the three and six months ended June 30, 2024, respectively.

The decrease for the six months ended June 30, 2025, was primarily due to higher turnaround activity.

Results from our Refining segment decreased $410 million and $1,506 million for the three and nine months ended September 30, 2025, respectively.

The decrease in the three months ended September 30, 2025, was primarily driven by a before-tax impairment of $948 million related to our equity investment in WRB and accelerated depreciation for the Los Angeles Refinery, partially offset by improved realized margins and higher volumes.

The increase in realized margins was primarily due to higher market crack spreads, partially offset by lower product differentials and unfavorable inventory hedging impacts.

The decrease in the nine months ended September 30, 2025, was primarily driven by a before-tax impairment of $948 million related to our equity investment in WRB and accelerated depreciation for the Los Angeles Refinery.

Our worldwide refining crude oil capacity utilization rate was 99% and 93% for the three and nine months ended September 30, 2025, respectively, compared with 94% and 95% in the three and nine months ended September 30, 2024, respectively.

The increase for the three months ended September 30, 2025, was primarily due to fewer weather-related impacts, as well as lower turnaround activity.

The decrease for the nine months ended September 30, 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.

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

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Millions of Dollars

Income Before Income Taxes $ 571 415 1,853 781

Income (Loss) Before Income Taxes $ 251 (22) 2,104 759

Dollars Per Barrel

Income Before Income Taxes

Income (Loss) Before Income Taxes

$ 0.18 (1.43) 1.08 0.37

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

Results from the M&S segment increased $156 million and $1,072 million for the three and six months ended June 30, 2025, respectively.

The increase in the three months ended June 30, 2025, was primarily due to higher U.S.

and international marketing fuel margins, partially offset by a before-tax aggregate unrealized loss of $89 million on foreign currency forward contracts entered into in connection with the Germany and Austria Marketing pending divestiture.

The increase in the six months ended June 30, 2025, was primarily due to a before-tax gain of $1 billion associated with the sale of our investment in Coop and higher U.S.

and international marketing fuel margins.

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

See Note 23—Assets Held for Sale in the Notes to Consolidated Financial Statements for additional information related to the Germany and Austria Marketing pending divestiture.

Results from the M&S segment increased $273 million and $1,345 million for the three and nine months ended September 30, 2025, respectively.

The increases for both periods of 2025 were due to an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels, compared with an accrual of $241 million recorded during the third quarter of 2025 related to the same matter.

The increase in the three months ended September 30, 2025, was partially offset by lower U.S.

marketing fuel margins.

The increase in the nine months ended September 30, 2025, was additionally impacted by a before-tax gain of $1 billion associated with the sale of our investment in Coop, higher U.S.

and international marketing fuel margins, partially offset by a before-tax aggregate unrealized loss on foreign currency forward contracts entered into in connection with the Germany and Austria Marketing pending divestiture.

See Note 7—Investments, Loans and Long-Term Receivables for additional information regarding the sale of Coop, Note 13—Contingencies and Commitments for additional information regarding the Propel Fuels litigation and Note 23—Assets Held for Sale for additional information related to the Germany and Austria Marketing pending divestiture, in the Notes to Consolidated Financial Statements.

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

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2025 2024 2025 2024

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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 $78 million and $208 million for the three and six months ended June 30, 2025, respectively.

The decreases in both periods were primarily due to decreased margins driven by increased feedstock costs and unfavorable hedging impacts, partially offset by increased credit production.

Results from the Renewable Fuels segment increased $73 million and decreased $135 million for the three and nine months ended September 30, 2025, respectively.

The increase in the three months ended September 30, 2025, was primarily due to improved margins driven by optimized feedstock volumes and higher international credits, partially offset by unfavorable inventory impacts.

The decrease in the nine months ended September 30, 2025, was primarily driven by decreased margins as a result of increased feedstock volumes, unfavorable inventory impacts, partially offset by increased credit production.

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

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Three Months Ended

June 30 Six Months Ended

September 30 Nine Months Ended

2025 2024 2025 2024

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

Net interest expense increased $30 million and $31 million for the three and six months ended June 30, 2025, respectively, primarily due to debt issuances related to an asset acquisition.

Corporate overhead and other costs increased $63 million and $96 million for the three and six months ended June 30, 2025, respectively.

The increases for both periods of 2025 were primarily due to higher depreciation expense associated with information technology assets and advisory fees related to proxy solicitation services.

Net interest expense increased $34 million and $65 million for the three and nine months ended September 30, 2025, respectively, primarily due to higher average debt balances.

Corporate overhead and other costs increased $105 million for the nine months ended September 30, 2025, primarily due to higher depreciation expense associated with information technology assets as well as higher advisory fees recorded during the second quarter of 2025 related to proxy solicitation services.

CAPITAL RESOURCES AND LIQUIDITY

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Percent of floating-rate debt to total debt 9% 9

* Excludes $105 million of “Cash and cash equivalents” included in “Assets held for sale” on our consolidated statement of income as of September 30, 2025.

** Capital includes total debt and total equity.

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 six months of 2025, we generated $1 billion of cash from operations.

During the first nine months of 2025, we generated $2.2 billion of cash from operations.

We received proceeds from asset dispositions of $2 billion and received $2 billion from net debt borrowings.

We funded capital expenditures and investments of $1.6 billion and an acquisition of $2.2 billion, net of cash acquired.

Additionally, we paid $666 million to repurchase shares of our common stock and paid $956 million of dividends to our common stockholders.

During the first six months of 2025, cash and cash equivalents decreased by $686 million.

Additionally, we paid $933 million to repurchase shares of our common stock and paid $1.4 billion of dividends to our common stockholders.

During the first nine months of 2025, cash and cash equivalents, including cash classified within assets held for sale, increased by $212 million.

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 six months of 2025, cash generated by operating activities was $1 billion, compared with $1.9 billion for the first six months of 2024.

The decrease was primarily due to unfavorable working capital impacts and lower earnings.

During the first nine months of 2025, cash generated by operating activities was $2.2 billion, compared with $3 billion for the first nine months of 2024.

The decrease was primarily due to unfavorable working capital impacts.

Our short- and long-term operating cash flows are highly dependent upon refining and marketing margins, NGL prices and chemicals margins.

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

During the first six months of 2025, cash from operations included aggregate distributions of $501 million from our equity affiliates, while cash from operations during the first six months of 2024 included aggregate distributions of $656 million from our equity affiliates.

During the first nine months of 2025, cash from operations included aggregate distributions of $783 million from our equity affiliates, while cash from operations during the first nine months of 2024 included aggregate distributions of $1,045 million from our equity affiliates.

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

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Debt Issuances

On September 18, 2025, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $2 billion aggregate principal amount of junior subordinated notes that are fully and unconditionally guaranteed by Phillips 66.

The junior subordinated notes issuance consisted of:

• $1 billion aggregate principal amount of 5.875% Series A Junior Subordinated Notes due 2056 (Series A 2056 Notes).

• $1 billion aggregate principal amount of 6.200% Series B Junior Subordinated Notes due 2056 (Series B 2056 Notes).

Interest on the Series A 2056 Notes and Series B 2056 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on March 15, 2026.

The Series A 2056 Notes will bear interest at 5.875% per year until March 15, 2031.

The interest rate will reset every five years beginning on March 15, 2031, to equal the then-current five-year U.S.

Treasury rate plus a spread of 2.283%, provided that the interest rate will not reset below 5.875%.

The Series B 2056 Notes will bear interest at 6.200% per year until March 15, 2036.

The interest rate will reset every five years beginning on March 15, 2036, to equal the then-current five-year U.S.

Treasury rate plus a spread of 2.166%, provided that the interest rate will not reset below 6.200%.

We may defer interest payments on the Series A 2056 Notes and Series B 2056 Notes on one or more occasions for up to 10 consecutive years per deferral period.

If interest payments on the Series A 2056 Notes or Series B 2056 Notes are deferred, we may not, subject to certain limited exceptions, declare or pay any dividends or distributions, or redeem, purchase, acquire, or make a liquidation payment on any of our capital stock during the deferral period.

Also, during the deferral period, we may not (i) pay any principal of, or interest or premium, if any, on or repay, repurchase or redeem any debt securities of Phillips 66 or Phillips 66 Company that rank equally with, or junior to, the Series A 2056 Notes and Series B 2056 Notes, respectively, in right of payment or (ii) make any payments with respect to any guarantee by Phillips 66 or Phillips 66 Company of indebtedness if the guarantee ranks equally with or junior to the Series A 2056 Notes or Series B 2056 Notes, respectively, in right of payment.

On September 11, 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 and commenced on December 15, 2024.

Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15 of each year and commenced on March 15, 2025.

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.

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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.

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 yielded sufficient principal and interest over their remaining term to permit the trustee to satisfy the remaining principal and interest due on the Discharged Notes on the applicable maturity dates.

On September 20, 2024, Phillips 66 and Phillips 66 Company ceased to be 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 was 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 would have been revived and reinstated.

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

Accordingly, the Discharged Notes and the government obligations were derecognized on our balance sheet at December 31, 2024.

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

Accounts Receivable Securitization

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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.

Under the Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain accounts receivable in an amount not to exceed $1 billion in the aggregate, and will secure its obligations with a pledge of undivided interests in such accounts receivable, 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.

On September 29, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $1 billion to $1.25 billion and extend the term of the facility through September 28, 2026.

Under the amended Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain accounts receivable in an amount not to exceed $1.25 billion in the aggregate, and will secure its obligations with a pledge of undivided interests in such accounts receivable, 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 term Secured Overnight Financing Rate (SOFR) plus the applicable margin.

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

For the three months ended June 30, 2025, we sold $303 million of accounts receivable in exchange for a $303 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction.

For the six months ended June 30, 2025, we sold $433 million in accounts receivable in exchange for cash proceeds of $130 million and a $303 million reduction in our borrowings under the Receivables Securitization Facility.

We recognized immaterial charges associated with the transfer of financial assets, which are included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income during the three and six months ended June 30, 2025.

At June 30, 2025, we had utilized the full $1 billion capacity of ourReceivable Securitization Facility from $303 million of sold accounts receivable not yet remitted to the purchaser and $697 million of outstanding borrowings, which is recognized within the “Short-term debt” line item on our consolidated balance sheet.

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

The outstanding borrowings at June 30, 2025, and December 31, 2024, were secured by approximately $4.5 billion and $4.6 billion of accounts receivable held by P66 Receivables at June 30, 2025, and December 31, 2024, respectively, which are included within the “Accounts and notes receivable” line item on our consolidated balance sheet.

For the three months ended September 30, 2025, we sold $160 million of accounts receivable for cash proceeds under the Receivables Securitization Facility.

For the nine months ended September 30, 2025, we sold $593 million in accounts receivable in exchange for cash proceeds of $290 million, and a $303 million reduction in our borrowings under the Receivables Securitization Facility was recognized as a non-cash financing transaction.

At September 30, 2025, we had utilized $160 million of the $1.25 billion capacity on our Receivable Securitization Facility from sold accounts receivable not yet remitted to the Administrative Agent.

We had no outstanding borrowings under the Receivable Securitization Facility at September 30, 2025.

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

The outstanding borrowings at December 31, 2024, were secured by approximately $4.6 billion of accounts receivable held by P66 Receivables at December 31, 2024, which are included within the “Accounts and notes receivable” line item on our consolidated balance sheet.

Credit Facilities and Commercial Paper

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

At June 30, 2025, $200 million of borrowings were outstanding under the 2025 Uncommitted Facility.

At September 30, 2025, $200 million of borrowings were outstanding under the 2025 Uncommitted Facility.

On June 25, 2024, we entered into a $400 million uncommitted credit facility (the 2024 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 June 30, 2025, and December 31, 2024, $400 million of borrowings were outstanding under the 2024 Uncommitted Facility.

At September 30, 2025, and December 31, 2024, $400 million of borrowings were outstanding under the 2024 Uncommitted Facility.

On February 28, 2024, we entered into a new $5 billion revolving credit agreement (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of February 28, 2029.

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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 June 30, 2025, and December 31, 2024, no amount had been drawn under the Facility.

At September 30, 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 June 30, 2025, we had $1,349 million borrowings outstanding under this program, while at December 31, 2024, $435 million of commercial paper had been issued under this program.

At September 30, 2025, we had $897 million borrowings 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

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Total Committed Capacity Available

At June 30, 2025, and December 31, 2024, we had approximately $3.7 billion and $4.6 billion, respectively, of total committed capacity available under the credit facilities described above.

At September 30, 2025, and December 31, 2024, we had approximately $5.2 billion and $4.6 billion, respectively, of total committed capacity available under the credit facilities described above.

Pending Marketing Divestiture

On May 15, 2025, we entered into a definitive agreement to divest 65% of our equity interest in Germany and Austria Marketing for expected pre-tax cash proceeds of approximately $1.6 billion (1.5 billion Euros), subject to purchase price adjustments for working capital and certain long-term liabilities on the closing date.

We will retain a 35% non-operating equity interest in Germany and Austria Marketing through a new joint venture, which will be formed prior to the closing of the transaction.

We expect to close this transaction in the second half of 2025, subject to regulatory approvals and other customary closing conditions.

We will retain a 35% non-operating equity interest in Germany and Austria Marketing through a joint venture, which will be formed prior to the closing of the transaction.

We expect to close this transaction in the fourth quarter of 2025, subject to customary closing conditions.

See Note 23—Assets Held for Sale in the Notes to Consolidated Financial Statements for additional information.

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

Availability of Debt Financing

In September 2025, Moody’s Ratings announced a long-term credit rating change for the company to Baa1 from A3 and affirmed the P-2 rating assigned to the company’s commercial paper program.

The outlook has been changed to stable from negative.

Standard & Poor’s currently rates the company’s long-term debt at BBB+ with a stable outlook and commercial paper at A-2.

Both agencies’ ratings are considered investment grade.

Failure to maintain investment grade ratings could prohibit us from accessing the commercial paper market.

However, a rating downgrade by one or both rating agencies would not trigger an automatic default under any of our corporate debt and we would expect to maintain access to funds under our existing liquidity facilities.

Off-Balance Sheet Arrangements

Lease Residual Value Guarantees

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 June 30, 2025.

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

In September 2025, we amended and extended the lease term to September 2030.

Under the new operating lease agreement, we have a residual value guarantee with a maximum potential future exposure of $404 million at September 30, 2025.

We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $174 million.

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The USACE also identified three “action” alternatives;

two of them contemplate that the USACE would reissue the easement to Dakota Access under essentially the same terms as 2017 with either the same or a larger volume of oil allowed through the pipeline, while the third alternative would require decommissioning of the current pipeline and construction of a new line 39 miles upstream from the current location.

two of them contemplate that the USACE would reissue the easement to Dakota Access under essentially the same terms as in 2017 with either the same or a larger volume of oil allowed through the pipeline, while the third alternative would require decommissioning of the current pipeline and construction of a new line 39 miles upstream from the current location.

The public comment period concluded on December 13, 2023.

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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.

Subsequently, the Court dismissed this lawsuit, finding that the Tribe’s lawsuit was premature and cannot be refiled until after a final EIS is issued.

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

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

We funded our 25% share of the repayment, or $250 million, with a capital contribution of $171 million in March 2024 and $79 million of distributions we elected not to receive from Dakota Access in the first quarter of 2024.

At June 30, 2025, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $850 million.

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, 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 June 30, 2025, our 25% share of the maximum potential equity contributions under the CECU was approximately $215 million.

At September 30, 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 June 30, 2025.

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.

See Note 7—Investments, Loans and Long-Term Receivables for additional information regarding our investments in Dakota Access and ETCO and Note 12—Guarantees for additional information regarding our guarantees, in the Notes to Consolidated Financial Statements.

Capital Requirements

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Debt Financing

Our debt balance at June 30, 2025, and December 31, 2024, was $20.9 billion and $20.1 billion, respectively.

Our total debt-to-capital ratio was 42% and 41% at June 30, 2025, and December 31, 2024, respectively.

Our debt balance at September 30, 2025, and December 31, 2024, was $21.8 billion and $20.1 billion, respectively.

Our total debt-to-capital ratio was 44% and 41% at September 30, 2025, and December 31, 2024, respectively.

On June 27, 2025, DCP LP early redeemed the outstanding $525 million of its 5.375% Senior Notes due July 2025, with an aggregate principal amount of $825 million.

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

Subsequent Refining Acquisition

On September 9, 2025, we entered into a definitive agreement to acquire the remaining 50% ownership interest in WRB from subsidiaries of Cenovus Energy Inc.

The transaction closed on October 1, 2025, for total cash consideration of $1.3 billion, subject to post-closing adjustments.

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

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

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On July 10, 2025, our Board of Directors declared a quarterly cash dividend of $1.20 per common share.

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

This dividend was paid on September 2, 2025, to shareholders of record as of the close of business on August 19, 2025.

On October 8, 2025, our Board of Directors declared a quarterly cash dividend of $1.20 per common share.

This dividend is payable on December 1, 2025, to shareholders of record as of the close of business on November 17, 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 six months ended June 30, 2025, we repurchased 6 million shares at an aggregate cost of approximately $0.6 billion.

For the nine months ended September 30, 2025, we repurchased 8 million shares at an aggregate cost of approximately $0.9 billion.

Since July 2012, we have repurchased 246 million shares under our share repurchase program at an aggregate cost of $22.4 billion.

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Employee Benefit Plan Contributions

During the six months ended June 30, 2025, we contributed $56 million to our U.S.

During the nine months ended September 30, 2025, we contributed $157 million to our U.S.

pension and other postretirement benefit plans and $4 million to our international pension plans.

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Millions of Dollars

Six Months Ended

Nine Months Ended

Capital Expenditures and Investments*

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** Our share of joint ventures’ capital spending.

During the first six months of 2025, capital spending in our Midstream segment was $600 million and included:

During the first nine months of 2025, capital spending in our Midstream segment was $947 million and included:

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

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

During the first six months of 2025, on a 100% basis, CPChem’s capital expenditures and investments were $813 million.

During the first nine months of 2025, on a 100% basis, CPChem’s capital expenditures and investments were $1,218 million.

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

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

Capital spending for the Refining segment during the first six months of 2025 was $324 million.

Capital spending for the Refining segment during the first nine months of 2025 was $469 million.

Major capital activities included spend to improve reliability at our refineries and installation of facilities to improve market capture, product value and utilization;

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Marketing and Specialties

Capital spending for the M&S segment during the first six months of 2025 was $49 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.

Capital spending for the M&S segment during the first nine months of 2025 was $75 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 six months of 2025 was $18 million.

Capital spending for the Renewable Fuels segment during the first nine months of 2025 was $33 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 six months of 2025 was $19 million, primarily related to information technology.

Capital spending for Corporate and Other during the first nine months of 2025 was $27 million, primarily related to information technology.

Contingencies

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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 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.

Based on the willfulness finding, Propel Fuels asked the Propel Court to award $1.2 billion in exemplary damages, and Phillips 66 Company filed a brief in opposition to that request.

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

On August 5, 2025, the Propel Court entered a final judgment against Phillips 66 Company in the amount of $833 million.

The judgment includes the $604.9 million jury verdict, $195 million of exemplary damages, and $33.3 million of pre-judgment interest at 7%.

Post-judgment interest of 10% is accruing from the date of the final judgment.

On August 25, 2025, Phillips 66 Company filed three post-trial motions requesting that the Propel Court render judgment in favor of Phillips 66 Company, grant a new trial, and/or reduce the damages award.

On October 20, 2025, the Propel Court denied Phillips 66 Company’s motions.

On October 24, 2025, Propel Fuels filed additional motions with the Propel Court seeking attorney’s fees and costs.

Phillips 66 will file its opposition and once the record on this issue is complete, the Propel Court will rule on these motions.

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

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 June 30, 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.

Because of the uncertainties associated with ongoing litigation, we are unable to estimate the range of reasonably possible loss that may be attributable to exemplary damages, if any, in excess of the amount accrued.

As a result of the August 2025 final judgment and the October 2024 jury verdict, our recorded accruals totaled $846 million and $604.9 million which are included within the “Selling, general and administrative expenses” line on our consolidated statement of income for the periods ending September 30, 2025 and 2024, respectively, and are reported in the M&S segment.

The accrued amounts are reflected as “Other liabilities and deferred credits” on our consolidated balance sheet as of September 30, 2025, and December 31, 2024, respectively.

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

If information were to become available that would allow us to reasonably estimate a range of potential exposure in an amount higher or lower than the amount already accrued, we would adjust our accrued liabilities accordingly.

While Phillips 66 Company believes the jury verdict is not legally or factually supported and intends to pursue post-judgment remedies and file an appeal, there can be no assurances that such defense efforts will be successful.

To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.

Until the final resolution of this matter, we may be exposed to losses in excess of the amount recorded, and such amounts may have a material adverse effect on our financial position.

Environmental

1 unchanged sentence

For a discussion of the most significant international and federal environmental laws and regulations to which we are subject, see the “Environmental” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report on Form 10-K.

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

For the six months ended June 30, 2025, we were able to fully satisfy our obligations under the RFS through producing and blending renewable fuels into the motor fuel we produce.

For the six months ended June 30, 2024, we incurred expenses of $96 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 $175 million and $114 million for the six months ended June 30, 2025 and 2024, respectively.

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

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

For the nine months ended September 30, 2025, we were able to fully satisfy our obligations under the RFS through producing and blending renewable fuels into the motor fuel we produce.

For the nine months ended September 30, 2024, we incurred expenses of $23 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 within 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 $280 million and $180 million for the nine months ended September 30, 2025 and 2024, respectively.

These expenses are included within 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 and renewable fuels production, blending activities and renewable volume obligation requirements.

2 unchanged sentences

These requests, notices and lawsuits assert potential liability for remediation costs at various sites that typically are not owned by us, but allegedly contain wastes attributable to our past operations.

At March 31, 2025, 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.

During the second quarter of 2025, our legal organization approved the removal of two sites, thus, leaving 17 unresolved sites with potential liability at June 30, 2025.

At June 30, 2025, we reported that we had been notified of potential liability under CERCLA and comparable state laws at 17 sites within the United States and Puerto Rico.

There were no changes reported during the third quarter of 2025, thus, leaving 17 unresolved sites with potential liability at September 30, 2025.

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.

5 unchanged sentences

For examples of legislation and regulation or precursors for possible regulation that do or could affect our operations, see the “Climate Change” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report on Form 10-K.

We consider and take into account anticipated future GHG emissions in designing and developing major facilities and projects, and implement energy efficiency initiatives to reduce GHG emissions.

We consider and take into account anticipated future GHG emissions in designing and developing major facilities and projects, and we implement energy efficiency initiatives to reduce GHG emissions.

Data on our GHG emissions, legal requirements regulating such emissions and the possible physical effects of climate change on our coastal assets are incorporated into our planning, investment and risk management decision-making.

6 unchanged sentences

All guarantees are full and unconditional.

At June 30, 2025, $14.4 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

At September 30, 2025, $16.4 billion of publicly held debt securities has been guaranteed by the Obligor Group.

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

2 unchanged sentences

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 six months ended June 30, 2025, and the summarized financial position at June 30, 2025, and December 31, 2024, for the Obligor Group on a combined basis were:

The summarized results of operations for the nine months ended September 30, 2025, and the summarized financial position at September 30, 2025, and December 31, 2024, for the Obligor Group on a combined basis were:

Summarized Combined Statement of Loss Millions of Dollars

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Sales and other operating revenues $ 71,822

41 unchanged sentences

Coast Worldwide

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Income (loss) before income taxes $ 250 119 (580) (307) (518)

3 unchanged sentences

Operating expenses 249 256 162 242 909

Equity in losses of affiliates 2 — — — 2

Equity in (earnings) losses of affiliates 2 — (33) — (31)

Other segment (income) expense, net (1) — 1 7 7

10 unchanged sentences

11.94 8.74 15.82 12.31 12.15

Three Months Ended June 30, 2024

Income before income taxes $ 15 42 243 2 302

Three Months Ended September 30, 2024

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

Taxes other than income taxes

3 unchanged sentences

Selling, general and administrative expenses

14 8 27 11 60

Operating expenses

10 unchanged sentences

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

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

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

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

10 unchanged sentences

Coast Worldwide

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Income (loss) before income taxes $ 100 (113) (238) (845) (1,096)

21 unchanged sentences

9.24 7.61 13.35 11.17 10.27

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Income (loss) before income taxes $ 32 60 764 (446) 410

34 unchanged sentences

Millions of Dollars, Except as Indicated

Three Months Ended

June 30, 2025 Three Months Ended

June 30, 2024

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

International U.S.

1 unchanged sentence

Realized Marketing Fuel Margins

Income before income taxes $ 429 56 223 145

Income (loss) before income taxes $ 34 155 (262) 143

Depreciation and amortization 11 5 9 20

2 unchanged sentences

Other operating revenues* (129) (9) (127) (11)

Other (income) expense, net 12 — 14 (2)

Other expense, net 13 — 14 2

Special items:

Net loss on asset disposition — 89 — —

Net gain on asset disposition — (15) — —

Marketing margins 376 198 447 188

3 unchanged sentences

184,435 34,035 182,823 28,207

Income before income taxes per barrel ( dollars per barrel )

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

$ 0.18 4.55 (1.43) 5.07

5 unchanged sentences

Millions of Dollars, Except as Indicated

Six Months Ended

June 30, 2025 Six Months Ended

June 30, 2024

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

International U.S.

69 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our commodity price risk and interest rate risk at June 30, 2025, did not differ materially from the risks disclosed under Item 7A of our 2024 Annual Report on Form 10-K.

Our commodity price risk and interest rate risk at September 30, 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