Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]

Fair Value Disclosures

FAIR VALUE MEASUREMENTS

Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tiered fair value hierarchy is established, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets that are observable, either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. We had no Level 3 assets or liabilities at June 30, 2012 and December 31, 2011.

Assets and liabilities measured at fair value are based on a market valuation approach using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis at June 30, 2012 and December 31, 2011 are in the following table. During the three months ended June 30, 2012, we recognized a $7 million other than temporary impairment of a European available for sale investment within interest and sundry income (expense).

					Fair Value
	Total Cost Basis				Level 1				Level 2						Total
Millions of dollars	2012		2011		2012		2011		2012			2011			2012			2011
Money market funds (1)	$	—	$	340	$	—	$	340	$	—		$	—		$	—		$	340
Net derivative contracts	—		—		—		—		(55		)	(57		)	(55		)	(57		)
Available for sale investments	14		21		10		15		—			—			10			15

⁽¹⁾  Money market funds are primarily comprised of government obligations.

Other Fair Value Measurements

The fair value of long-term debt (including current maturities) was $2,617 million and $2,670 million at June 30, 2012 and December 31, 2011, respectively, and was estimated using discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements.