What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 307 added, 276 removed, 786 unchanged (43% of the section changed)

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During 2025, we reported earnings of $4.4 billion and generated $5 billion in cash from operating activities.

We funded capital expenditures and investments of $1.9 billion, completed acquisitions for cash consideration of $625 million, purchased government obligations of $1.1 billion that were ultimately used to extinguish debt, and received proceeds from asset dispositions of $1.1 billion.

Additionally, we received proceeds from debt issuances, net of debt repayments, of $2.1 billion.

We funded capital expenditures and investments of $2.2 billion, completed acquisitions of $3.5 billion, net of cash acquired and received proceeds from asset dispositions of $3.5 billion.

We paid $1.2 billion to repurchase common stock and $1.9 billion to fund dividends on our common stock.

Additionally, we paid $0.4 billion of debt repayments, net of proceeds from debt issuances.

We ended 2025 with $1.1 billion of cash and cash equivalents and $5.7 billion of total committed capacity available under our credit facilities.

Strategic Priorities

In November 2022, we announced financial and operational targets toward achieving the company’s strategic priorities, and in October 2023, we announced updates and enhancements to certain of those targets.

The strategic priority targets were focused on achieving financial and operational goals through year-end 2024, with an emphasis on delivering shareholder returns;

improving refining performance;

capturing value from wellhead-to-market;

executing business transformation initiatives;

maintaining financial strength and flexibility;

and driving disciplined growth and returns.

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.

As the company has completed its business transformation efforts, the company has shifted to operational and cost reduction targets intended to drive world-class operations across its portfolio, while maintaining emphasis on growing its 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.

With the return of $5.3 billion to shareholders through share repurchases and dividends during 2024, we achieved our target of returning between $13 billion and $15 billion to our shareholders from July 2022 to year-end 2024, as we distributed a total of $13.6 billion to shareholders.

Our new 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.

• 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 will 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.

At year-end 2024, we achieved final total company run-rate cost savings of $1.5 billion through our business transformation efforts, including a $0.3 billion reduction of sustaining capital, exceeding our targeted savings on a run-rate basis.

Our worldwide refining crude oil capacity utilization rate was 95% for 2024, and our worldwide refining clean product yield was 87%, compared to 92% and 85%, respectively, in 2023.

Our new priorities for 2025-2027 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.

In January 2025, we announced the next phase of the company’s strategic priorities along with financial and operational performance targets through year-end 2027.

These targets demonstrate the company’s continued focus on world-class operations;

disciplined growth and returns;

financial strength and flexibility and shareholder returns.

• World-Class Operations – We are focused on operational and cost reduction targets driving world-class operations across our portfolio.

Optimizing utilization rates and product yield at our refineries through reliable and safe operations will enable us to capture the value available in the market in terms of prices and margins.

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.

During 2025, our worldwide refining crude oil capacity average utilization rate was 94% for 2025, and our worldwide refining clean product yield was 87%.

▪ During the fourth quarter of 2025, we ceased fuel production and began idling the facilities at our Los Angeles Refinery.

• Disciplined Growth and Returns – A disciplined capital allocation process ensures we make investments 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.

▪ During 2024, we completed the conversion of our San Francisco Refinery in Rodeo, California, into the Rodeo Renewable Energy Complex (Rodeo Complex).

▪ In 2024, we funded capital expenditures and investments of $1.9 billion and completed acquisitions of $0.6 billion through disciplined capital allocation and $1.1 billion in proceeds from asset dispositions.

In January 2025, we received proceeds from asset dispositions of $2.1 billion and 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 2024, we expanded our Midstream NGL wellhead-to-market platform with the acquisition of Pinnacle Midland Parent LLC (Pinnacle Midstream) and approval of a follow-on processing plant expansion in the Midland Basin expected to be completed in mid-2025.

In addition, we achieved over $500 million of run-rate synergies from the integration of DCP Midstream Class A Segment, which is comprised of the businesses, activities, assets and liabilities of DCP Midstream, LP (DCP LP) and its subsidiaries and general partner entities, surpassing our target.

▪ Our new financial targets for 2025-2027 reflect our plans to grow Midstream and Chemicals businesses, as well as maintain total annual capital expenditures and investments of approximately $2 billion, excluding acquisitions.

▪ In 2025, we funded capital expenditures and investments of $2.2 billion and completed a Midstream acquisition of $2.2 billion.

We also acquired the remaining 50% interest in WRB Refining LP (WRB) for $1.3 billion, which will enable full integration with our broader value chain and expand our position in the Central Corridor region.

This growth was achieved in part through $3.5 billion in proceeds from asset dispositions, including $1.7 billion from the sale of 65% of our interest in Germany and Austria retail marketing business (Germany and Austria Marketing), $1.2 billion from the sale of our 49% interest in Coop Mineraloel AG (Coop), and $853 million from the sale of DCP Midstream, LP’s (DCP LP) 25% ownership in Gulf Coast Express Pipeline LLC (GCX) .

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

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

▪ We budgeted $2.4 billion for 2026 capital expenditures and investments, exclusive of acquisitions and our share of capital spending by equity affiliates.

This includes $1.3 billion of growth capital, primarily in our Midstream segment.

▪ During 2025, we continued the 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 NGL pipelines, fractionation facilities and distribution systems.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

▪ 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 WRB following the consolidation on 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.

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

▪ During 2024, we used available cash and proceeds from asset dispositions and debt offerings to fund capital expenditures and investments, complete the acquisition of Pinnacle Midstream, purchase government obligations that were ultimately used to extinguish debt, repurchase shares of our common stock and pay dividends on our common stock.

▪ We are targeting reductions of total debt to $17 billion and reductions of 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 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 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.

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.

Prior period information has been reclassified for comparability.

Starting on August 18, 2022, our Midstream operating segment and consolidated results reflect the impacts of the merger of DCP Midstream, LLC and Gray Oak Holdings LLC Merger (DCP Midstream Merger).

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, in the Notes to Consolidated Financial Statements for additional information.

Our focus remains on protecting the stable cash generation from the Midstream and M&S businesses while evaluating future opportunities to optimize our portfolio.

▪ During 2025, we used available cash and proceeds from asset dispositions and debt offerings to fund capital expenditures and investments, repurchase shares of our common stock and pay dividends on our common stock.

▪ We are targeting reductions of total debt to $17 billion and reductions of our debt-to-capital ratio by the end of 2027.

• 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, excluding working capital, to shareholders through share repurchases and dividends.

This 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 February 2026, our Board of Directors declared a quarterly cash dividend of $1.27 per common share, representing a $0.07 increase, reflecting our commitment to a secure, competitive and growing dividend.

Business Environment

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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.

Our NGL business 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 2025, compared with $0.68 per gallon during 2024.

The Henry Hub natural gas price was $3.54 per million British thermal units (MMBtu) during 2025, compared with $2.24 per MMBtu during 2024.

The increase in NGL prices was primarily due to higher demand and increased exports, while the decrease in natural gas prices was partially due to increased production and constraints on Permian natural gas exit capacity.

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

export infrastructure increases.

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

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The benchmark high-density polyethylene chain margin was 7.1 cents per pound in 2025, compared with 17.7 cents per pound in 2024.

The increase was mainly due to improved polyethylene sales prices and lower natural gas and ethane prices.

The decrease was mainly due to higher ethane prices, partially driven by rising natural gas prices, and continued industry oversupply from capacity additions.

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

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

The composite 3:2:1 market crack spread for our business decreased to an average of $16.95 per barrel during 2024, from an average of $28.37 per barrel in 2023.

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

The composite 3:2:1 market crack spread for our business increased to an average of $20.42 per barrel during 2025, from an average of $16.95 per barrel in 2024.

The increase in the composite market crack spread was primarily driven by stronger petroleum diesel demand, supported by low seasonal inventories, and lower crude prices.

The price of U.S.

benchmark crude oil, West Texas Intermediate at Cushing, Oklahoma, decreased to an average of $64.89 per barrel during 2025, from an average of $75.83 per barrel in 2024.

The decrease in crude oil prices was primarily driven by increased production in the United States and other countries outside of the Organization of the Petroleum Exporting Countries (OPEC).

The decrease in crude oil prices was primarily driven by increased global production, including production in the United States.

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 Complex, as well as the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.

Our Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Renewable Energy Complex (Rodeo Complex) and at our Humber Refinery.

In addition, this segment includes 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.

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Net income attributable to Phillips 66 for the year ended December 31, 2025, was $4,403 million, compared with $2,117 million for the year ended December 31, 2024.

The decrease in 2024 was primarily due to a decline in realized refining margins primarily driven by lower market crack spreads, partially offset by lower income tax expense.

The increase in 2025 was primarily due to a before-tax aggregate gain of $1.9 billion associated with the partial sale of Germany and Austria Marketing in December 2025, improved realized refining margins, primarily driven by higher market crack spreads, as well as 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.

These increases were partially offset by a before-tax impairment of $948 million recognized in the third quarter of 2025, related to our equity method investment in WRB, as well as lower equity earnings from CPChem.

Net income attributable to Phillips 66 for the year ended December 31, 2024, was $2,117 million, compared with $7,015 million for the year ended December 31, 2023.

The decrease in 2023 was primarily due to the recognition of an aggregate before-tax gain of $3,013 million in 2022 in our Midstream segment in connection with the DCP Midstream Merger, and a decline in realized refining margins, partially offset by a decrease in income tax expense and lower unrealized investment losses related to our investment in NOVONIX.

See the “Segment Results” section for additional information on our segment results and Note 24—Income Taxes, in the Notes to Consolidated Financial Statements for additional information on income taxes.

See also Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, in the Notes to Consolidated Financial Statements for additional information regarding the DCP Midstream Merger.

The decrease in 2024 was primarily due to a decline in realized refining margins mainly driven by lower market crack spreads, partially offset by lower income tax expense.

See the “Segment Results” section for additional information on our segment results, Note 9—Investments, Loans and Long-Term Receivables, Note 25—Income Taxes, in the Notes to Consolidated Financial Statements for additional information.

Statement of Income Analysis

Sales and other operating revenues decreased 8%, primarily due to lower prices for crude oil, refined petroleum products, and NGL, partially offset by higher crude oil, NGL, renewable diesel, and renewable jet fuel sales volumes.

Purchased crude oil and products decreased 11% in 2025, primarily due to lower prices for crude oil, refined petroleum products, and NGL, partially offset by higher crude oil and NGL product purchase volumes.

Equity in earnings of affiliates decreased 57% in 2025, primarily due to lower equity earnings from CPChem and Excel Paralubes LLC (Excel Paralubes) as a result of decreased margins.

The decrease in 2025 was additionally impacted by lower equity earnings from the sales of ownership interests in Coop and GCX in January 2025, as well as lower equity earnings from WRB prior to our acquisition on October 1, 2025, due to lower refining margins.

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

See Note 9—Investments, Loans and Long-Term Receivables, and Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information regarding the sales of ownership interests and WRB acquisition, respectively.

Net gain on dispositions increased $2,663 million in 2025, primarily due to a before-tax gain of $1.9 billion associated with the partial sale of Germany and Austria Marketing in December 2025, as well as a before-tax gain of $1 billion associated with the sale of our investment in Coop in January 2025, both recognized in the M&S segment.

These increases were 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 Rockies Express Pipeline LLC (REX).

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

Other income increased $195 million in 2025, primarily due to the recognition of Clean Fuel Production credits beginning in 2025.

Operating expenses increased $484 million in 2025, primarily due to our acquisitions of WRB in October 2025 and Coastal Bend in April 2025.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

Selling, general and administrative expenses decreased 13% in 2025, mainly driven by an accrual of $605 million recorded in 2024 related to litigation with Propel Fuels, Inc.

(Propel Fuels), compared with $262 million recorded in 2025 related to the same matter.

See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information.

Depreciation and amortization increased 38% in 2025, primarily due to accelerated depreciation for the Los Angeles Refinery, as well as additional depreciation on the assets from the Coastal Bend acquisition in April 2025.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for information regarding the cessation of fuel production and idling of the Los Angeles Refinery and Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for information regarding the Coastal Bend acquisition.

Impairments increased $604 million in 2025, primarily due to the before-tax impairment of $948 million related to our equity method investment in WRB recognized in the third quarter of 2025.

This was partially offset by a before-tax impairment of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas and 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.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding impairments.

Taxes other than income taxes increased $462 million in 2025, primarily due to the expiration of the Biodiesel Blender Tax Credit as of December 31, 2024.

Interest and debt expense increased 15% in 2025, primarily driven by higher average debt balances.

See Note 15—Debt, in the Notes to Consolidated Financial Statements for additional information regarding our debt issuances and repayments.

Income tax expense increased 78% in 2025, primarily due to higher income before income taxes.

See Note 25—Income Taxes, in the Notes to Consolidated Financial Statements for additional information regarding our income taxes.

Net income attributable to noncontrolling interests increased $67 million in 2025, due to improved results from DCP LP, including a gain on sale of DCP LP’s equity investment in GCX in January 2025.

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

Sales and other operating revenues decreased 3%, primarily due to lower prices for refined petroleum products and crude oil, partially offset by an increase in prices for NGL.

Purchased crude oil and products increased 1% in 2024, primarily due to higher refined product purchase volumes, partially offset by lower prices for refined petroleum products.

Equity in earnings of affiliates decreased 12% in 2024, primarily due to lower equity earnings from WRB Refining LP (WRB) as a result of decreased margins, Rockies Express Pipeline LLC (REX) due to the sale of our ownership interest in 2024, South Texas Gateway Terminal due to the sale of our ownership interest in 2023, and Excel Paralubes LLC due to declining margins, partially offset by higher sales volumes and lower maintenance costs.

Equity in earnings of affiliates decreased 12% in 2024, primarily due to lower equity earnings from WRB as a result of decreased margins, REX due to the sale of our ownership interest in 2024, South Texas Gateway Terminal due to the sale of our ownership interest in 2023, and Excel Paralubes due to declining margins, partially offset by higher sales volumes and lower maintenance costs.

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

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

Net gain on dispositions increased $206 million in 2024, primarily due to a before-tax gain of $238 million associated with the sale of our ownership interest in REX, as well as a before-tax gain of $67 million associated with the foreign currency forward contracts entered into in connection with the sale of our ownership interest in Coop Mineraloel AG (Coop).

These increases were partially offset by before-tax gains totaling $137 million associated with the sales of our ownership interests in the South Texas Gateway Terminal and the Belle Chasse Terminal in 2023.

See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for more information regarding our sales of REX and Coop.

See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding our sales of REX and Coop.

Other income decreased 32% in 2024, primarily due to lower interest income as a result of lower cash balances and decreased results from trading activities.

These decreases were partially offset by an increase in the fair value of our investment in NOVONIX.

Selling, general and administrative expenses increased 11% in 2024, mainly driven by an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels, Inc.

(Propel Fuels).

Selling, general and administrative expenses increased 11% in 2024, mainly driven by an accrual of $605 million recorded during the third quarter of 2024 related to litigation with Propel Fuels.

The increase was partially offset by lower employee-related expenses and selling expenses.

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Depreciation and amortization increased 20% in 2024, primarily due to $253 million of accelerated depreciation recorded in 2024 associated with our plan to cease operations at our Los Angeles Refinery during the fourth quarter of 2025, as well as depreciation and amortization associated with the startup of additional production capacity at the Rodeo Complex.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for information regarding our plans to cease operations at our Los Angeles Refinery.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for information regarding the idling of our Los Angeles Refinery.

Impairments increased $432 million in 2024, primarily due to before-tax impairments recorded in our Midstream segment of certain gathering and processing assets in Texas, an equity investment in a crude pipeline in Oklahoma and certain crude gathering assets in Texas.

In 2024, we also recorded before-tax impairments in our Midstream and Refining segments related to certain crude oil processing and logistics assets in California.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for more information regarding impairments.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding impairments.

Taxes other than income taxes decreased 53% in 2024, primarily due to an increase in tax credits generated from higher renewable diesel production and blending activity.

Income tax expense decreased 78% in 2024, primarily due to lower income before income taxes.

See Note 24—Income Taxes, in the Notes to Consolidated Financial Statements for more information regarding our income taxes.

See Note 25—Income Taxes, in the Notes to Consolidated Financial Statements for additional information regarding our income taxes.

Net income attributable to noncontrolling interests decreased 74% in 2024.

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See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, and Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information.

Sales and other operating revenues and purchased crude oil and products decreased 13% and 15%, respectively, in 2023.

These decreases were mainly due to lower prices for refined petroleum products, crude oil and NGL.

Equity in earnings of affiliates decreased 32% in 2023, resulting from lower equity earnings from DCP Midstream, DCP Sand Hills, DCP Southern Hills and Gray Oak Pipeline as a result of the DCP Midstream Merger in August 2022, as well as decreased equity earnings from WRB and CPChem primarily due to lower margins, partially offset by lower operating costs.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, in the Notes to Consolidated Financial Statements and the Chemicals segment analysis in the “Segment Results” section for additional information.

Net gain on dispositions increased $108 million in 2023, primarily due to a before-tax gain 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.

Other income decreased $2,378 million in 2023, primarily due to an aggregate before-tax gain of $3,013 million recognized in our Midstream segment in connection with the DCP Midstream Merger in August 2022.

The decrease was partially offset by lower unrealized investment losses on our investment in NOVONIX in 2023 compared with 2022, and higher interest income.

See Note 5—Business Combinations, and Note 19—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information on the aggregate before-tax gain, and for additional information regarding our investment in NOVONIX.

Selling, general and administrative expenses increased 16% in 2023, mainly driven by the consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills starting in August 2022 and higher costs associated with our business transformation.

These increases were partially offset by lower selling expenses due to decreased refined petroleum product prices.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information regarding business transformation restructuring costs.

Depreciation and amortization increased 21% in 2023, primarily due to additional depreciation and amortization related to assets acquired as a result of consolidating DCP Midstream Class A Segment, DCP Southern Hills and DCP Sand Hills starting in August 2022.

Taxes other than income taxes increased 33% in 2023, primarily due to consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills starting in August 2022 and an increase in environmental taxes.

Interest and debt expense increased 45% in 2023, primarily driven by higher interest expense as a result of consolidating DCP Midstream Class A Segment, new debt issuances in 2023 related to the DCP LP Merger, and a $53 million before-tax loss on the early redemption of DCP LP’s 5.850% junior subordinated notes.

Income tax expense decreased 31% in 2023 primarily due to lower income before income taxes.

See Note 24—Income Taxes, in the Notes to Consolidated Financial Statements for more information regarding our income taxes.

Net income attributable to noncontrolling interests decreased 39% in 2023.

The decrease reflects the impacts of the DCP LP Merger in June 2023, and the consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills and the derecognition of a noncontrolling interest related to Gray Oak Holdings as a result of the DCP Midstream Merger in August 2022.

The decrease also reflects the impact of the merger between us and Phillips 66 Partners LP (Phillips 66 Partners), a wholly owned subsidiary of Phillips 66, in March 2022.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, and Note 30—Phillips 66 Partners LP, in the Notes to Consolidated Financial Statements for additional information on the DCP Midstream Merger and the Phillips 66 Partners merger, respectively.

Segment Results

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NGL Production** 462 436 437

Pipeline Throughput–Y-Grade to Market*** 754 707 704

NGL Pipeline Throughput–Y-Grade to Market***† 917 754 707

NGL Fractionated† 896 728 711

* 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 from August 18, 2022, forward.

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

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

*** Represents volumes delivered to 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.

† Includes volumes from the Coastal Bend acquisition, effective April 1, 2025.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

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

In connection with the DCP Midstream Merger, the results of our Transportation business reflect a decrease in our indirect economic interest in Gray Oak Pipeline to 6.5% from August 18, 2022, forward.

Prior to August 18, 2022, the Transportation results presented in the table above reflect Gray Oak Holdings’ 65% economic interest in Gray Oak Pipeline.

In addition, the results of our NGL business include the consolidated results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills from August 18, 2022, forward.

Prior to August 18, 2022, our investments in DCP Midstream, DCP Sand Hills and DCP Southern Hills were accounted for using the equity method and equity earnings from these investments were included in the results of our NGL business.

In the Notes to Consolidated Financial Statements, see Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for additional information regarding the DCP Midstream Merger.

natural gas and NGL gathering, processing, transportation, fractionation, storage export and marketing services.

Results from our Midstream segment increased $179 million in 2025, compared with 2024.

Results from our Transportation business decreased $374 million in 2025, compared with 2024.

The decrease in 2025 was primarily due to the impacts from the sale of our ownership interest in REX in the second quarter of 2024, lower equity earnings from Dakota Access, LLC and the retirement of a rail rack at the Los Angeles Refinery.

Results from our NGL business increased $553 million in 2025, compared with 2024.

The increase was due to a before-tax impairment charge recognized in 2024 associated with certain gathering and processing assets in Texas and results from the Coastal Bend operations acquired in April 2025.

Additionally, the increase in 2025 was impacted by a before-tax gain from the sale of DCP LP’s ownership interest in GCX in January 2025, increased gathering and processing activity in the Permian region associated with our acquisition of Pinnacle Midland Parent LLC (herein referred to as Dos Picos), and improved export activity.

These increases were partially offset by a before-tax impairment charge of $79 million related to our equity investment in an NGL pipeline in Texas in the fourth quarter of 2025.

See the “Executive Overview and Business Environment” section for information on market factors impacting 2025 results.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for further information regarding Coastal Bend and Dos Picos acquisitions.

See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information regarding the sale of ownership interests.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for further information regarding impairments.

Results from our Midstream segment decreased $181 million in 2024, compared with 2023.

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These decreases were partially offset by improved pipeline volumes and higher liquefied petroleum gas cargo volumes and margins.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for further information regarding impairments.

See Note 9—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for further information regarding the sale of our ownership interest in REX.

See the “Executive Overview and Business Environment” section for information on market factors impacting 2024 results.

Results from our Midstream segment decreased $2,357 million in 2023, compared with 2022.

Results from our Transportation business increased $134 million in 2023, compared with 2022.

The increase in 2023 was primarily due to higher volumes and tariffs, as well as decreased operating costs, partially offset by lower before-tax gains on sales and transfers of interests in equity affiliates.

In August 2023, we recognized a $101 million before-tax gain on the sale of our 25% ownership interest in the South Texas Gateway Terminal, while in August 2022, we recognized a before-tax gain of $182 million related to the transfer of an indirect economic interest in Gray Oak Pipeline as part of the DCP Midstream Merger.

Results from our NGL business decreased $2,491 million in 2023, compared with 2022.

The decrease was primarily due to an aggregate before-tax gain of $2,831 million recognized in the third quarter of 2022 from remeasuring our previously held equity investments in DCP Midstream, DCP Sand Hills and DCP Southern Hills to their fair values in connection with the DCP Midstream Merger.

The decrease was partially offset by the consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills from August 18, 2022, forward, as well as increased fractionation volumes at the Sweeny Hub reflecting the startup of Frac 4 in October 2022.

See Note 5—Business Combinations, and Note 19—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information regarding the before-tax gains recorded in connection with the DCP Midstream Merger.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for further information regarding impairments.

Year Ended December 31

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

Results from the Chemicals segment decreased $579 million in 2025, compared with 2024.

The decrease was primarily due to reduced polyethylene margins driven by lower sales prices and higher feedstock costs, as well as increased utility costs.

See the “Executive Overview and Business Environment” section for information on market factors impacting CPChem’s 2025 results.

Results from the Chemicals segment increased $276 million in 2024, compared with 2023.

The increase was primarily due to improved margins driven by higher sales prices and lower feedstock costs, as well as increased volumes and decreased utility costs.

See the “Executive Overview and Business Environment” section for information on market factors impacting CPChem’s 2024 results.

Results from the Chemicals segment decreased $256 million in 2023, compared with 2022.

The decrease was primarily due to lower margins driven by decreased sales prices, partially offset by lower utility costs due to a decline in natural gas prices.

Year Ended December 31

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Worldwide 10.88 8.84 17.26

* Includes our proportional share of our equity method investment in WRB through September 30, 2025.

Beginning on October 1, 2025, 100% of Borger Refinery and Wood River Refinery are included in consolidated results.

Refer to Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

** 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 at our Los Angeles Refinery in the fourth quarter of 2025, and are evaluating potential future uses of the property.

On October 1, 2025, we acquired the remaining 50% ownership interest in WRB from subsidiaries of Cenovus Energy Inc.

(Cenovus) for total cash consideration of $1.3 billion, subject to post-closing adjustments.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

In the fourth quarter of 2025, we ceased fuel production at our Los Angeles Refinery.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information.

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Refinery Production 633 551 497

West Coast***

Crude Oil Capacity 209 244 313

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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 MB/D to 75 MB/D.

** Includes our proportional share of our equity method investment in WRB through September 30, 2025.

Beginning on October 1, 2025, 100% of Borger Refinery and Wood River Refinery are included in consolidated results.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

*** In the fourth quarter 2025, we ceased fuel production and began idling the facilities at our Los Angeles Refinery, and the associated crude oil capacity is excluded from the statistics above beginning on October 1, 2025.

Additionally, 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 MB/D to 75 MB/D.

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

The Rodeo facility’s net crude throughput capacity of 52 MB/D prior to shutdown was excluded from the 2024 operating statistics above.

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 the Refining segment decreased $5,705 million in 2024, compared with 2023.

The decrease was primarily due to lower realized margins as a result of declining market crack spreads.

The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels, as of December 31, 2025, at 10 refineries in the United States and Europe.

Results from the Refining segment increased $91 million in 2025, compared with 2024.

The increase was driven by higher realized margins, higher volumes, and benefits associated with claims and settlements.

The increase in realized margin was primarily due to improved market crack spreads, partially offset by weaker product differentials, and higher Renewable Identification Number (RIN) costs.

Additionally, the increase in 2025 was partially offset by a before-tax impairment of $948 million related to our equity method investment in WRB recorded in the third quarter of 2025, and accelerated depreciation for the Los Angeles Refinery.

Our worldwide refining crude oil capacity utilization rate was 94% and 95% in 2025 and 2024, respectively.

See the “Executive Overview and Business Environment” section for information on industry crack spreads and other market factors impacting this year’s results.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information related to accelerated depreciation.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding the impairment of our equity method investment in WRB.

Results from the Refining segment decreased $5,705 million in 2024, compared with 2023.

The decrease was primarily due to lower realized margins, partially offset by lower utility costs.

The decrease in realized margins was primarily driven by a decline in market crack spreads, partially offset by increased feedstock advantage and improved crude optimization benefits.

The decrease was primarily due to lower realized margins as a result of declining market crack spreads.

Our worldwide refining crude oil capacity utilization rate was 95% and 92% in 2024 and 2023, respectively.

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Distillates 2.62 2.69 3.23

* On third-party branded refined product sales, excluding excise taxes.

* On third-party branded refined product sales.

Thousands of Barrels Daily

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

Before-tax income from the M&S segment increased $3.5 billion in 2025, compared with 2024.

The increase in 2025 was primarily driven by a before-tax aggregate gain of $1.9 billion associated with the partial sale of Germany and Austria Marketing in December 2025, a before-tax gain of $1 billion associated with the sale of our investment in Coop, as well as higher U.S.

and international marketing fuel margins.

Additionally, the increase in 2025 was impacted by an accrual of $605 million recorded in 2024 related to litigation with Propel Fuels, compared with $262 million recorded in 2025 related to the same matter.

See the “Executive Overview and Business Environment” section for information on marketing fuel margins and other market factors impacting 2025 results.

See Note 9—Investments, Loans and Long-Term Receivables and Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding the dispositions in 2025 and litigation with Propel Fuels, respectively.

Before-tax income from the M&S segment decreased $886 million in 2024, compared with 2023.

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marketing fuel margins.

See the “Executive Overview and Business Environment” section for information on marketing fuel margins and other market factors impacting 2024 results.

See Note 18—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding our litigation with Propel Fuels.

Before-tax income from the M&S segment decreased $175 million in 2023, compared with 2022.

The decrease in 2023 was primarily driven by lower international realized marketing fuel margins and decreased equity earnings from affiliates.

Renewable Fuels

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Results from the Renewable Fuels segment decreased $182 million in 2025, compared with 2024.

The decrease was primarily driven by higher costs related to the ramp-up of the Rodeo Complex.

The decline was primarily driven by increased feedstock costs from full-year facility operations, along with unfavorable inventory impacts.

These decreases were partially offset by increased renewable product sales, as well as, higher credit generation.

Results from the Renewable Fuels segment decreased $351 million in 2024, compared with 2023.

The decrease was primarily driven by higher costs related to the ramp-up of the Rodeo Complex, as well as lower results from renewable transport fuel certificate activity due to lower blending margins.

These decreases were partially offset by higher credit generation and increased renewable fuel sales.

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

The decrease was primarily driven by higher costs related to the ramp-up of the Rodeo Complex.

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

Corporate and Other

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See Note 20—Fair Value Measurements, in the Notes to Consolidated Financial Statements for additional information regarding our investment in NOVONIX.

Net interest expense increased $153 million in 2025, compared with 2024, primarily driven by higher average debt balances.

Corporate overhead and other increased $90 million in 2025, compared with 2024, 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.

The fair value of our investment in NOVONIX declined by $13 million during 2025, compared with a decline of $3 million during 2024.

Net interest expense increased $116 million in 2024, compared with 2023, primarily driven by decreased interest income as a result of lower cash balances.

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The fair value of our investment in NOVONIX declined by $3 million during 2024, compared with a decline of $39 million during 2023.

Net interest expense increased $92 million in 2023, compared with 2022, primarily driven by higher interest expense as a result of consolidating DCP Midstream Class A Segment, new debt issuances in 2023 related to the DCP LP Merger and a $53 million before-tax loss on the early redemption of DCP LP’s 5.850% junior subordinated notes.

The increase in interest expense in 2023 was partially offset by increased interest income.

See Note 15—Debt, in the Notes to Consolidated Financial Statements for additional information regarding debt.

Corporate overhead and other increased $39 million in 2023, compared with 2022, primarily due to higher costs related to our business transformation.

See Note 4—Restructuring, in the Notes to Consolidated Financial Statements for additional information regarding restructuring costs.

The fair value of our investment in NOVONIX declined by $39 million during 2023, compared with a decline of $442 million during 2022.

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 2024, we generated $4.2 billion in cash from operations.

Additionally, we received proceeds from debt issuances, net of debt repayments, of $2.1 billion.

We paid $3.5 billion to repurchase common stock and $1.9 billion to fund dividends on our common stock.

During 2025, we generated $5.0 billion in cash from operations and we received proceeds from asset dispositions of $3.5 billion.

We funded capital expenditures and investments of $2.2 billion and completed acquisitions of $3.5 billion, net of cash acquired.

Additionally, we paid $1.2 billion to repurchase shares of our common stock, paid $1.9 billion of dividends to our common stockholders, and repaid $0.4 billion of debt, net of proceeds from debt issuances.

During 2025, cash and cash equivalents decreased $0.6 billion to $1.1 billion.

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Operating Activities

During 2025, cash generated by operating activities was $5.0 billion, a $0.8 billion increase compared with 2024.

The increase was primarily due to higher earnings, driven by improved realized refining margins, partially offset by unfavorable working capital impacts.

During 2024, cash generated by operating activities was $4.2 billion, a $2.8 billion decrease compared with 2023.

The decrease was primarily due to lower earnings, driven by a decline in realized refining margins, partially offset by more favorable working capital impacts.

During 2023, cash generated by operating activities was $7.0 billion, a $3.8 billion decrease compared with 2022.

The decrease was primarily due to lower realized refining margins, working capital impacts, reduced operating distributions from equity affiliates, completion of long-term crude oil exchanges and higher contributions to our pension plans.

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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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.

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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, commencing on March 15, 2025.

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 issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

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

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 December 31, 2024.

For the year ended December 31, 2024, we recognized an immaterial gain on the extinguishment of this debt.

Term Loan Agreement

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or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement.

At December 31, 2024 and 2023, $550 million and $1.25 billion were borrowed under the Term Loan Agreement, which matures in June 2026, respectively.

At December 31, 2025, no borrowings were outstanding under the Term Loan Agreement, as the remaining balance was prepaid in full on December 4, 2025.

At December 31, 2024, $550 million was outstanding under the Term Loan Agreement, which had a maturity date of June 2026.

This agreement was terminated as of December 31, 2025.

Related Party Advance Term Loan Agreements

At December 31, 2023, borrowings outstanding under our Advance Term Loan agreements with WRB totaled $290 million.

Borrowings under these agreements were due between 2035 and 2038 and bore interest at a floating rate based on an adjusted term SOFR plus an applicable margin, payable on the last day of each month.

On December 31, 2024, WRB distributed its Advance Term Loan with a principal balance of $290 million, including the right to receive any accrued but unpaid interest, to Phillips 66 Company, resulting in the reduction of our related party debt balance and our investment in WRB by $290 million.

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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.

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

Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its accounts receivable, 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.

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.

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 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 receivable outstanding under the Receivables Securitization Facility accrue interest at an adjusted SOFR plus the applicable margin.

In all instances, Phillips 66 Company retains the servicing of the accounts receivables transferred.

P66 Receivables’ sole activity consists of purchasing receivables from Phillips 66 Company, providing those receivables as collateral for P66 Receivables’ borrowings or on-selling certain of its receivables under the Receivables Securitization Facility.

P66 Receivables’ sole activity consists of purchasing accounts receivable from Phillips 66 Company, providing those accounts receivable as collateral for P66 Receivables’ borrowings or on-selling certain of its accounts receivable under the Receivables Securitization Facility.

P66 Receivables is a separate legal entity with its own separate creditors, who will be entitled, upon its liquidation, to be satisfied out of P66 Receivables’ assets prior to assets or value in P66 Receivables becoming available to P66 Receivables’ equity holders.

The assets of P66 Receivables, including any funds of P66 Receivables 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 P66 Receivables under the Receivables Securitization Facility are available to P66 Receivables for payment to Phillips 66 Company, for sales of its receivables to P66 Receivables under the Receivables 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.

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.

Cash receipts from the sale of accounts receivables under the Receivables Securitization Facility, received at the time of sale, are classified as cash flows from operating activities.

For the year-ended December 31, 2024, we sold $125 million of accounts receivables in exchange for a $125 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction.

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 year ended December 31, 2024.

At December 31, 2024, $121 million of the sold accounts receivable remained outstanding, which represents our maximum potential future exposure under the guarantee.

Collections on accounts receivable in excess of amounts owed by P66 Receivables under the Receivables Securitization Facility are available to P66 Receivables for payment to Phillips 66 Company, for sales of its accounts receivable to P66 Receivables under the Receivables 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 accounts receivable may be limited by the availability of eligible accounts receivable and other customary factors and conditions, as well as the covenants set forth in the Receivables Securitization Facility.

Sales of accounts receivable 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 receivable sold to the purchasers.

Cash receipts from the sale of accounts receivable under the Receivables Securitization Facility, received at the time of sale, are classified as cash flows from operating activities.

For the year-ended December 31, 2025, we sold $759 million in accounts receivable in exchange for cash proceeds of $290 million, and a $469 million reduction in our borrowings under the Receivables Securitization Facility which was recognized as a non-cash financing transaction.

For the year ended December 31, 2024, we sold $125 million in accounts receivable in exchange for a $125 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction.

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 for the years ended December 31, 2025 and 2024.

At December 31, 2025 and 2024, $125 million and $121 million of the sold accounts receivable remained uncollected, respectively, which represents our maximum potential future exposure under the guarantee associated with the Receivables Securitization Facility.

Borrowings under the Receivables Securitization Facility are recognized as short-term debt on the consolidated balance sheet.

Borrowings are secured by the accounts receivables, held by P66 Receivables, which remain reported as accounts receivables on the consolidated balance sheet.

At December 31, 2024, we had outstanding borrowings of $375 million under the Receivables Securitization Facility, secured by approximately $4.6 billion of accounts receivable held by P66 Receivables.

At December 31, 2024, we had no unused capacity under the Receivables Securitization Facility.

Borrowings are secured by the accounts receivable, held by P66 Receivables, which remain reported as accounts receivable on the consolidated balance sheet.

At December 31, 2025 and 2024, we had outstanding borrowings of $200 million and $375 million, respectively.

These borrowings were secured by accounts receivable held by P66 Receivables of $4.4 billion and $4.6 billion for 2025 and 2024, respectively, which are included within the “Accounts and notes receivable” line item on our consolidated balance sheet.

At December 31, 2025, we had utilized $367 million of the $1.25 billion capacity of the Receivables Securitization Facility from $167 million of sold accounts receivable not yet remitted to the Administrative Agent and $200 million of outstanding borrowings.

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.

Accounts Receivable Factoring

In addition to the Receivables Securitization Facility, discussed above, the Company entered into other facilities with various financial institutions during the fourth quarter of 2025 that enable the Company to sell certain eligible accounts receivable to these financial institutions on a non-recourse basis.

Sales of accounts receivable under these facilities meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet.

Cash receipts from the sale of accounts receivable, received at the time of sale, are classified as cash flows from operating activities.

The Company retains the servicing on all accounts receivable sold under these facilities.

For the year ended December 31, 2025, we sold $195 million of accounts receivable under these facilities for cash proceeds.

We recognized immaterial charges associated with these transfers, which are included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income for the year ended December 31, 2025.

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 February 21, 2025, no amount had been drawn under the 2025 Uncommitted Facility.

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

At December 31, 2025, no borrowings were outstanding, while at December 31, 2024, the entire $400 million had been drawn 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 December 31, 2024 and 2023, no amounts were drawn under the Facility or the previous revolving credit facility, respectively.

At December 31, 2025 and 2024, no amounts were drawn under the Facility or the previous revolving credit 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 December 31, 2024, $435 million of commercial paper had been issued under this program.

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

At December 31, 2025, and 2024, $200 million and $435 million, respectively, 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, both of 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

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Asset & Investment Dispositions

On December 1, 2025, we divested 65% of our interest in Germany and Austria Marketing for cash proceeds of $1.7 billion.

On January 31, 2025, we sold our 49% ownership interest in Coop and 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.

On December 10, 2024, we sold our equity interests in certain pipeline and terminaling assets in North Dakota for cash proceeds of approximately $143 million.

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On February 28, 2023, we sold the Belle Chasse Terminal for approximately $76 million.

Subsequent Investment Dispositions

On January 30, 2025, we sold our 25% ownership interest in Gulf Coast Express Pipeline LLC for cash proceeds of $853 million.

On January 31, 2025, we sold our 49% ownership interest in Coop.

We received cash proceeds of 1.06 billion Swiss francs, consisting of a sales price of approximately 977 million Swiss francs and a final dividend relating to financial year 2024 of 83 million Swiss francs from Coop that was paid on January 30, 2025.

We also settled the foreign currency forward contracts entered into in connection with the asset sale, in which we sold 1.06 billion Swiss francs in exchange for $1.24 billion U.S.

See Note 9—Investments, Loans and Long-Term Receivables and Note 10—Properties, Plants and Equipment, in the Notes to Consolidated Financial Statements for additional information regarding asset and investment dispositions.

Phillips 66 Availability of Debt Financing

We have an A3 credit rating, with a stable outlook, from Moody’s Investors Service and a BBB+ credit rating, with a stable outlook, from Standard & Poor’s.

These investment grade ratings have served to lower our borrowing costs and facilitate access to a variety of lenders.

We do not have any ratings triggers on any of our corporate debt that would cause an automatic default, and thereby impact our access to liquidity, in the event of a rating downgrade by one or both rating agencies.

Failure to maintain investment grade ratings could prohibit us from accessing the commercial paper market, although we would expect to be able to access funds under our liquidity facilities mentioned above.

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.

Moody’s Ratings’ current outlook is stable.

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.

DCP LP Availability of Debt Financing

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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 December 31, 2024.

Under the operating lease agreement for 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 December 31, 2025.

We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $175 million.

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In 2020, the trial court presiding over litigation brought by the Standing Rock Sioux Tribe (the Tribe) ordered the U.S.

Army Corps of Engineers (USACE) to prepare an Environmental Impact Statement (EIS) addressing an easement under Lake Oahe in North Dakota.

The trial court later vacated the easement.

Although the easement is vacated, the USACE has no plans to stop pipeline operations while it proceeds with the EIS, and the Tribe’s request for a shutdown was denied in May 2021.

In June 2021, the trial court dismissed the litigation entirely.

Once the EIS is completed, new litigation or challenges may be filed.

In February 2022, the U.S.

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.

Also in February 2022, the Tribe withdrew as a cooperating agency, causing the USACE to halt the EIS process while the USACE engaged with the Tribe on their reasons for withdrawing.

The draft EIS process resumed in August 2022, and in September 2023, the USACE published its draft EIS for public comment.

The USACE identified five potential outcomes but did not indicate which one it preferred.

The options comprise two “no action” alternatives where the USACE would deny an easement to Dakota Access and require it to shut down the pipeline and either remove the pipe from under Lake Oahe or allow the pipeline to be abandoned-in-place under the lake.

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.

The public comment period concluded on December 13, 2023.

The USACE plans to review the comments and issue its final EIS in early 2026.

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

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

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

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.

Army Corps of Engineers (USACE) to prepare an Environmental Impact Statement (EIS) addressing environmental impacts from an easement allowing the passage of the Dakota Access Pipeline (DAPL) under Lake Oahe in North Dakota.

Later in 2020, the trial court vacated the easement, but operations have been allowed to continue while the USACE proceeds with the EIS as ordered.

The Tribe’s requests for a shutdown have been denied.

Most recently, in March 2025, the trial court dismissed a second lawsuit filed by the Tribe, again challenging USACE’s allowance of pipeline operations while the EIS process proceeds.

The Tribe’s lawsuit was premature, and the trial court held that it cannot be refiled until after a final EIS is issued.

In December 2025, the USACE published its final EIS, completing its analysis of alternatives.

The final EIS evaluates five alternatives:

two no-action alternatives (denial with restoration or abandonment) and three action alternatives, with one marked as USACE’s preferred alternative, that would grant the easement under varying conditions.

The preferred alternative would grant the easement subject to the same conditions as the 2017 easement but would authorize an increased throughput volume of 1.1 million barrels per day (bpd), up from the previous 570,000 bpd under the original authorization.

The remaining action alternatives would impose either additional operational conditions or require an alternate pipeline route, both of which may entail substantial implementation costs and could have a material impact on our financial statements.

We await a Record of Decision (ROD), which will provide a definitive statement of the selected alternative and any related conditions.

The Standing Rock Sioux Tribe and affiliated parties may file a new lawsuit in Washington, D.C., challenging the ROD shortly after it is issued.

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

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See Note 15—Debt, in the Notes to Consolidated Financial Statements for our annual debt maturities over the next five years and more information on debt repayments.

On December 16, 2024, upon maturity, Phillips 66 Company and Phillips 66 Partners repaid the 2.450% Senior Notes due December 2024 with an aggregate principal amount of $300 million.

On March 29, 2024, DCP LP redeemed $300 million of its 5.375% Senior Notes due July 2025.

On December 31, 2025, Phillips 66 early redeemed $400 million of its 1.300% Senior Notes due February 2026.

After the redemption, an aggregate principal amount of $100 million remained outstanding.

On December 4, 2025, Phillips 66 Company repaid the remaining $550 million outstanding under the Term Loan Agreement, which had a maturity date of June 2026, and terminated this agreement.

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.

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.

On December 16, 2024, upon maturity, Phillips 66 Company and Phillips 66 Partners repaid the 2.450% Senior Notes due December 2024 with an aggregate principal amount of $300 million.

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.

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See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, in the Notes to Consolidated Financial Statements for additional information regarding the DCP LP public common unit acquisition.

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 $1.1 billion 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.

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

For the year ended December 31, 2024, we recognized an immaterial gain on the extinguishment of this debt.

On October 1, 2025, we acquired the remaining 50% ownership interest in WRB from Cenovus for total cash consideration of $1.3 billion, subject to post-closing adjustments.

This acquisition, which will enable full integration with our broader value chain and expand our position in the Central Corridor region, was funded with cash and borrowings under our short-term liquidity facilities.

Associated with the acquisition, we assumed $450 million of short-term debt at acquisition and was also fully repaid on October 1, 2025.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

During the second quarter of 2025, we completed the Coastal Bend acquisition, which own various long haul NGL pipelines, fractionation facilities and distribution systems, for total consideration of $2.2 billion, net of cash acquired.

This acquisition further enhances our wellhead-to-market strategy and was funded with cash and borrowings under our short-term liquidity facilities.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

On October 1, 2024, we acquired a marketing business on the U.S.

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These operations were acquired to support the placement of renewable diesel produced by the Rodeo Complex.

On July 1, 2024, we acquired Pinnacle Midstream in our Midstream segment to expand our natural gas gathering and processing operations in the Permian Basin for cash consideration of $565 million.

Midstream Pending Acquisition

On January 6, 2025, we entered into a definitive agreement to acquire all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC (Y-Grade GP) and EPIC Y-Grade, LP (Y-Grade LP, and, together with Y-Grade GP and their respective subsidiaries, EPIC Y-Grade), which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems, for cash consideration of $2.2 billion, subject to certain closing adjustments.

On July 1, 2024, we acquired Dos Picos in our Midstream segment to expand our natural gas gathering and processing operations in the Permian Basin for cash consideration of $565 million.

Pending Acquisition

On January 5, 2026, we entered into a definitive agreement to acquire the assets and associated infrastructure of the Lindsey Oil Refinery.

The closing date of this transaction is dependent on regulatory approval and completion of other customary closing conditions.

On February 11, 2026, our Board of Directors declared a quarterly cash dividend of $1.27 per common share.

The dividend is payable March 5, 2025, to holders of record at the close of business on February 24, 2025.

The dividend is payable March 4, 2026, to shareholders of record at the close of business on February 25, 2026.

Share Repurchases

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At December 31, 2025, commodity purchase commitments with third parties and related parties were $43.0 billion and $19.8 billion, respectively.

The remaining purchase obligations mainly represent agreements to access and utilize the capacity of third-party equipment and facilities, including pipelines and product terminals, to transport, process, treat, and store products, and our net share of purchase commitments for materials and services for jointly owned facilities where we are the operator.

Debt Principal and Interest Obligations

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Capital Spending

Our capital expenditures and investments represent consolidated capital spending.

Our capital expenditures and investments, excluding acquisitions, represent consolidated capital spending.

Millions of Dollars

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Total Selected Equity Affiliates $ 680 895 930 1,198

* 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.

Prior period information has been reclassified for comparability.

Acquisitions, net of cash acquired, were $625 million, $263 million and $306 million for the years ended December 31, 2024, 2023 and 2022, respectively.

** Includes 100% of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills capital expenditures and investments from August 18, 2022, forward.

* On October 1, 2025, we acquired the remaining 50% equity interest in WRB from Cenovus.

As such, 100% of WRB’s capital expenditures and investments for the fourth quarter of 2025 and for the 2026 budget are included in Refining capital expenditures and investments.

** Our share of joint ventures’ capital spending.

Capital spending in our Midstream segment was $2.1 billion for the three-year period ended December 31, 2024, including:

• Expansion of gathering and processing systems in the Denver-Julesburg Basin and the Permian Basin.

• Contributions to Dakota Access for a pipeline optimization project, including a contribution to fund our 25% share of Dakota Access’ debt repayment.

• Continued development and expansion of fractionation capacity at our Sweeny Hub.

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

Capital spending in our Midstream segment was $2.6 billion for the three-year period ended December 31, 2025, primarily for:

• Completion of a second Dos Picos gas plant and increased capacity on the Coastal Bend pipeline, further expanding our NGL operations.

• 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 three-year period ended December 31, 2025, CPChem had a self-funded capital program that totaled $5.2 billion on a 100% basis.

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

Capital spending for the Refining segment during the three-year period ended December 31, 2024, was $1.8 billion, primarily for projects to enhance the yield of higher-value products and sustain the reliability and safety of our refineries.

Key projects funded during the three-year period included:

• Installation of facilities to improve market capture at our refineries.

• Installation of facilities to improve utilization and product value at our refineries.

• Capital spending to improve reliability at our refineries.

Capital spending for the Refining segment during the three-year period ended December 31, 2025, was $1.9 billion, primarily for projects to improve reliability at our refineries and installation of facilities to improve market capture, product value and utilization, such as our recently completed Sweeny Crude Flex project.

Marketing and Specialties

Capital spending for the M&S segment during the three-year period ended December 31, 2024, was $273 million, 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, marketing-related information technology enhancements, and reliability and maintenance projects for our Specialties business.

Capital spending for the M&S segment during the three-year period ended December 31, 2025, was $304 million, primarily for the continued development and enhancement of retail sites in Europe, marketing-related information technology enhancements, investment in electric vehicle charging infrastructure in the United States, 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

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Corporate and Other

Capital spending for Corporate and Other during the three-year period ended December 31, 2024, was $290 million, primarily related to information technology and facilities.

Our 2025 capital budget is $2.1 billion, including $998 million for sustaining capital and $1.1 billion for growth capital.

Our projected $2.1 billion capital budget excludes our portion of planned capital spending by our major joint ventures CPChem and WRB totaling $885 million and acquisitions, including the pending acquisition of EPIC Y-Grade, which is subject to regulatory approval and completion of other customary closing conditions.

See Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information regarding the pending acquisition of EPIC Y-Grade.

The Midstream capital budget of $975 million comprises $429 million for sustaining projects and $546 million for growth projects.

The Midstream capital budget advances the integrated NGL wellhead-to-market value chain by strengthening our position in key basins, including by increasing gas processing capacity.

In Refining, we plan to invest $822 million, including $414 million for sustaining capital.

Capital spending for Corporate and Other during the three-year period ended December 31, 2025, was $208 million, primarily related to information technology, energy research & innovation, and facilities.

Our 2026 capital budget is $2.4 billion, including $1.1 billion for sustaining capital and $1.3 billion for growth capital.

Our projected $2.4 billion capital budget excludes our portion of planned capital spending by CPChem totaling $680 million.

Midstream capital budget of $1.1 billion comprises $400 million for sustaining projects and $700 million for growth projects.

The Midstream capital budget advances the integrated NGL wellhead-to-market value chain by strengthening our position in key basins, including by increasing gas processing, pipeline and fractionation capacity.

In Refining, we plan to invest $1.1 billion, including $590 million for sustaining capital.

Refining growth capital of $490 million supports high-return, low-capital projects that will increase asset reliability and improve market capture.

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The Renewable Fuels capital budget of $40 million reflects investments at the Rodeo Complex related to feedstock optimization and logistics for renewable diesel and sustainable aviation fuel production.

The Corporate and Other capital budget of $75 million will primarily fund information technology projects.

The Corporate and Other capital budget of $70 million will fund spend associated with information technology projects and the redevelopment of our idled Los Angeles Refinery.

Contingencies

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Propel Fuels Litigation

In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, a California company that distributes E85 and other alternative fuels through fueling kiosks.

In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc.

(Propel Fuels), a California company that distributes E85 and other alternative fuels through fueling kiosks.

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

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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 anticipated to be filed by Propel Fuels seeking exemplary damages and attorneys’ fees.

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

Also in 2025, the Propel 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.

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, and the Propel Court awarded Propel Fuels $195 million in exemplary damages on July 30, 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 November 14, 2025, Phillips 66 Company filed its Notice of Appeal, which has been assigned to Division Two of the First District Court of Appeal.

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

Phillips 66 Company filed its opposition to that request on January 13, 2026, 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, 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 year ended December 31, 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 December 31, 2024.

As a result of the August 2025 final judgment and the October 2024 jury verdict, we recorded $262 million and $604.9 million of expense for the years ended December 31, 2025 and 2024, respectively, which are included within the “Selling, general and administrative expenses” line on our consolidated statement of income and reported in the M&S segment.

Therefore, our recorded accruals totaling $867 million and $604.9 million as of December 31, 2025 and 2024, respectively, are reflected as “Other liabilities and deferred credits” on our consolidated balance sheet.

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.

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.

While Phillips 66 Company believes the jury verdict is not legally or factually supported, there can be no assurances that such defense efforts will be successful.

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

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Federal Oil Pollution Act of 1990, under which owners and operators of onshore facilities and pipelines, as well as owners and operators of vessels are liable for removal costs and damages that result from a discharge of crude oil into navigable waters of the United States.

• European Union Trading Directive resulting in the European Union Emissions Trading Scheme (EU ETS), which uses a market-based mechanism to incentivize the reduction of greenhouse gas (GHG) emissions, as well as the United Kingdom Emissions Trading Scheme (UK ETS), which replaced the EU ETS in the United Kingdom in 2021, following BREXIT.

These laws and their implementing regulations set limits on emissions and, in the case of discharges to water, establish water quality limits.

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The law requires fuel producers and importers to provide additional renewable fuels for transportation motor fuels and stipulates a mix of various types.

Renewable Identification Numbers (RINs) form the mechanism used by the U.S.

RINs form the mechanism used by the U.S.

Environmental Protection Agency (EPA) to record compliance with the Renewable Fuel Standard (RFS).

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This program continues to be the subject of possible Congressional review and re-promulgation in revised form, and the EPA’s final regulations establishing RVO requirements have been and continue to be subject to legal challenge, further creating uncertainty regarding RVO requirements.

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

For the year ended December 31, 2024, we were able to fully satisfy our obligations under the RFS through blending renewable fuels into the motor fuel we produce.

For the years ended December 31, 2023 and 2022, we incurred expenses of $323 million and $478 million, respectively, associated with our obligation to purchase RINs in the open market to comply with the RFS for our wholly owned refineries.

We can fulfill our obligation under RFS through blending renewable fuels into the motor fuels we produce, producing renewable fuels at the Rodeo Complex, or through purchasing RINs on the open market.

For the years ended December 31, 2025 and 2024, we primarily fulfilled our obligation under RFS through blending renewable fuels into the motor fuels we produced or by renewable fuels produced at the Rodeo Complex and incurred no expenses to purchase RINs in the open market to comply with the RFS for our wholly owned refineries.

For the year ended December 31, 2023, we incurred expenses of $323 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 $255 million, $389 million and $437 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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

Prior to the acquisition of WRB on October 1, 2025, our jointly owned refineries

also incurred expenses associated with the purchase of RINs in the open market, of which our share was $280 million, $255 million and $389 million for the years ended December 31, 2025, 2024 and 2023, respectively.

These expenses were included in the “Equity in earnings of affiliates” line item on our consolidated statement of income through September 30, 2025.

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 RVO requirements.

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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 reported that 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, which left 19 unresolved sites with potential liability at December 31, 2024.

At 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.

During 2025, our legal organization approved the removal of two sites, leaving 17 unresolved sites with potential liability at December 31, 2025.

For the majority of Superfund sites, our potential liability will be less than the total site remediation costs because the percentage of waste attributable to us, versus that attributable to all other potentially responsible parties, is relatively low.

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Examples of legislation or precursors for possible regulation that do or could affect our operations include:

• EU ETS, which is part of the European Union’s policy to combat climate change and is a key tool for reducing industrial GHG emissions.

EU ETS impacts factories, power stations and other installations across all EU member states.

As a result of BREXIT, those types of entities in the United Kingdom are now subject to the UK ETS, rather than the EU ETS.

• Entities in the United Kingdom are subject to the UK ETS, which is similar to the EU ETS, to combat climate change and is a key tool for reducing industrial GHG emissions.

Both UK and EU ETS impact factories, power stations and other installations across all UK/EU member states.

• EU Renewable Energy Directive II, which increases the EU’s energy consumption from renewable sources in the electricity, heat, and transportation sectors to 32% by 2030.

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Phase IV runs from January 1, 2021 through 2030 and sectors covered under the ETS must reduce their GHG emissions by 43% compared to 2005 levels and there is agreement between the EU Member States, the European Parliament, and the EU Commission (which is pending ratification by the EU Council and European Parliament) to increase the Phase IV GHG emissions reduction to 63% by 2030 compared to 2005 levels.

The United Kingdom is no longer part of the EU ETS and, instead, has been under the UK ETS since 2021.

The United Kingdom has its own GHG emission reduction targets under the UK ETS.

Phillips 66 has assets that are subject to the EU ETS and assets that are subject to the UK ETS.

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The Paris Agreement establishes a commitment by signatory parties to pursue domestic GHG emission reductions.

In January 2025, President Trump signed an executive order directing the United States to withdraw from the Paris Agreement, and it is expected that President Trump and the Republican-led Congress will diverge from the previous administration’s positions and GHG commitments.

In January 2025, President Trump signed an executive order directing the United States to withdraw from the Paris Agreement, and the withdraw became effective in January 2026, following the applicable notification period.

Additionally, in January 2026, the United States withdrew from several international climate organizations, representing a further departure from the previous administration’s positions and GHG commitments.

However, future emission reduction targets and other provisions of legislative or regulatory initiatives and policies enacted in the future by the United States could be brought by future administrations or, in the absence of federal action, states may become more active and focused on taking legislative or regulatory actions aimed at climate change and minimizing GHG emissions.

30 unchanged sentences

The following discussion of critical accounting estimates addresses accounting areas where the nature of accounting estimates or assumptions could be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change.

Business Combination

Business Combinations

In accounting for a business combination, assets acquired, liabilities assumed and noncontrolling interests are recorded based on estimated fair values as of the date of acquisition.

The excess or shortfall of the purchase price when compared to the fair value of the net tangible and identifiable intangible assets acquired, if any, is recorded as goodwill or a bargain purchase gain, respectively.

A significant amount of judgment is made in estimating the individual fair value of property, plant and equipment, intangible assets, noncontrolling interests and other assets and liabilities.

Judgment is made in estimating the individual fair value of property, plant and equipment, intangible assets, noncontrolling interests and other assets and liabilities.

We use available information to make these fair value determinations and engage third-party specialists in the valuation process as necessary.

20 unchanged sentences

Different assumptions could affect the timing and the amount of an impairment of an investment in any period.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for information about impairments.

See Note 12—Impairments, in the Notes to Consolidated Financial Statements for additional information.

GUARANTOR FINANCIAL INFORMATION

4 unchanged sentences

All guarantees are full and unconditional.

At December 31, 2024, $14.4 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

At December 31, 2025, $16.0 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.

18 unchanged sentences

Net properties, plants and equipment 10,964

Goodwill 1,047

Due from non-guarantor subsidiaries, noncurrent 548

31 unchanged sentences

1,173 1,162 952 773 4,060

Equity in (earnings) losses of affiliates 7 (2) (55) — (50)

Equity in losses of affiliates 9 — 70 — 79

Other segment (income) expense, net (39) 2 (36) 39 (34)

Proportional share of refining gross margins contributed by equity affiliates † 92 — 570 — 662

107 — 809 — 916

Special items:

1 unchanged sentence

Legal settlement — — (181) — (181)

Pending Claims and Settlements — — (123) — (123)

Realized refining margins

8 unchanged sentences

10.18 8.86 13.26 10.86 10.88

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

** Income before income taxes divided by total processed inputs.

*** Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels.

As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts.

† Includes our proportional share of our equity method investment in WRB through September 30, 2025.

Beginning on October 1, 2025, 100% of Borger Refinery and Wood River Refinery are included in consolidated results.

Refer to Note 5—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

Millions of Dollars, Except as Indicated

Realized Refining Margins Atlantic Basin/Europe Gulf Coast Central Corridor West Coast Worldwide

Year Ended December 31, 2024

Income before income taxes $ 816 1,744 2,241 539 5,340

Income (loss) before income taxes $ (59) (68) 670 (908) (365)

Taxes other than income taxes

8 unchanged sentences

Other segment (income) expense, net 46 8 (45) 14 23

16 17 (67) (3) (37)

Proportional share of refining gross margins contributed by equity affiliates 107 — 809 — 916

90 — 1,257 — 1,347

Special items:

Certain tax impacts (9) — — — (9)

Legal settlement — (7) — — (7)

Realized refining margins

4 unchanged sentences

196,067 196,055 200,290 87,631 680,043

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

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

$ (0.30) (0.35) 6.18 (10.38) (0.62)

2 unchanged sentences

* 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.

** Income before income taxes divided by total processed inputs.

*** Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels.

18 unchanged sentences

Special items:

Regulatory compliance costs 9 26 22 13 70

Certain tax impacts (15) — — — (15)

Realized refining margins

49 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis