10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35349

Phillips 66

(Exact name of registrant as specified in its charter) 

Delaware	45-3779385
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2331 CityWest Blvd., Houston, Texas 77042

(Address of principal executive offices) (Zip Code)

832-765-3010

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
	Common Stock, $0.01 Par Value	PSX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒

The registrant had 458,862,316 shares of common stock, $0.01 par value, outstanding as of March 31, 2023.

PHILLIPS 66

TABLE OF CONTENTS

	Page
Part I – Financial Information
Item 1. Financial Statements
Consolidated Statement of Income	1
Consolidated Statement of Comprehensive Income	2
Consolidated Balance Sheet	3
Consolidated Statement of Cash Flows	4
Consolidated Statement of Changes in Equity	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and      Results of Operations	36
Item 3. Quantitative and Qualitative Disclosures About Market Risk	65
Item 4. Controls and Procedures	65
Part II – Other Information
Item 1. Legal Proceedings	66
Item 1A. Risk Factors	67
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6. Exhibits	69
Signatures	70

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Consolidated Statement of Income Phillips 66

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Revenues and Other Income
Sales and other operating revenues	$	34,396	36,179
Equity in earnings of affiliates	611		685
Net gain on dispositions	34		1
Other income (loss)	48		(143)
Total Revenues and Other Income	35,089		36,722
Costs and Expenses
Purchased crude oil and products	29,341		33,495
Operating expenses	1,578		1,340
Selling, general and administrative expenses	605		433
Depreciation and amortization	476		338
Impairments	8		—
Taxes other than income taxes	207		149
Accretion on discounted liabilities	6		6
Interest and debt expense	192		135
Foreign currency transaction (gains) losses	25		(2)
Total Costs and Expenses	32,438		35,894
Income before income taxes	2,651		828
Income tax expense	574		171
Net Income	2,077		657
Less: net income attributable to noncontrolling interests	116		75
Net Income Attributable to Phillips 66	$	1,961	582
Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
Basic	$	4.21	1.29
Diluted	4.20		1.29
Weighted-Average Common Shares Outstanding (thousands)
Basic	464,810		449,298
Diluted	467,034		450,011
See Notes to Consolidated Financial Statements.

1

Consolidated Statement of Comprehensive Income Phillips 66

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Net Income	$	2,077	657
Other comprehensive income (loss)
Defined benefit plans
Amortization of net actuarial loss, prior service credit and settlements	10		11
Plans sponsored by equity affiliates	3		5
Income taxes on defined benefit plans	(3)		(3)
Defined benefit plans, net of income taxes	10		13
Foreign currency translation adjustments	76		(82)
Income taxes on foreign currency translation adjustments	1		—
Foreign currency translation adjustments, net of income taxes	77		(82)
Income taxes on hedging activities	—		—
Hedging activities, net of income taxes	—		—
Other Comprehensive Income (Loss), Net of Income Taxes	87		(69)
Comprehensive Income	2,164		588
Less: comprehensive income attributable to noncontrolling interests	116		75
Comprehensive Income Attributable to Phillips 66	$	2,048	513

See Notes to Consolidated Financial Statements.

2

Consolidated Balance Sheet Phillips 66

	Millions of Dollars
	March 31 2023		December 31 2022
Assets
Cash and cash equivalents	$	6,965	6,133
Accounts and notes receivable (net of allowances of $67 million in 2023 and 2022)	8,123		9,497
Accounts and notes receivable—related parties	1,203		1,488
Inventories	5,445		3,276
Prepaid expenses and other current assets	934		1,528
Total Current Assets	22,670		21,922
Investments and long-term receivables	15,289		14,950
Net properties, plants and equipment	35,111		35,163
Goodwill	1,486		1,486
Intangibles	793		831
Other assets	1,913		2,090
Total Assets	$	77,262	76,442
Liabilities
Accounts payable	$	9,923	10,748
Accounts payable—related parties	646		575
Short-term debt	825		529
Accrued income and other taxes	1,388		1,397
Employee benefit obligations	436		764
Other accruals	1,487		1,876
Total Current Liabilities	14,705		15,889
Long-term debt	17,660		16,661
Asset retirement obligations and accrued environmental costs	872		879
Deferred income taxes	6,813		6,671
Employee benefit obligations	931		937
Other liabilities and deferred credits	1,365		1,299
Total Liabilities	42,346		42,336
Equity
Common stock (2,500,000,000 shares authorized at $0.01 par value)      Issued (2023—653,266,184 shares; 2022—652,373,645 shares)
Par value	7		7
Capital in excess of par	19,795		19,791
Treasury stock (at cost: 2023—194,403,868 shares; 2022—186,529,667 shares)	(16,083)		(15,276)
Retained earnings	26,903		25,432
Accumulated other comprehensive loss	(373)		(460)
Total Stockholders’ Equity	30,249		29,494
Noncontrolling interests	4,667		4,612
Total Equity	34,916		34,106
Total Liabilities and Equity	$	77,262	76,442

See Notes to Consolidated Financial Statements.

3

Consolidated Statement of Cash Flows Phillips 66

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Cash Flows From Operating Activities
Net income	$	2,077	657
Adjustments to reconcile net income to net cash provided by operating    activities
Depreciation and amortization	476		338
Impairments	8		—
Accretion on discounted liabilities	6		6
Deferred income taxes	146		142
Undistributed equity earnings	(242)		(100)
Net gain on dispositions	(34)		(1)
Unrealized investment loss	11		169
Other	14		40
Working capital adjustments
Accounts and notes receivable	1,663		(3,042)
Inventories	(2,003)		(1,152)
Prepaid expenses and other current assets	469		(849)
Accounts payable	(739)		4,809
Taxes and other accruals	(653)		119
Net Cash Provided by Operating Activities	1,199		1,136
Cash Flows From Investing Activities
Capital expenditures and investments	(378)		(370)
Return of investments in equity affiliates	60		15
Proceeds from asset dispositions	77		1
Other	(24)		(74)
Net Cash Used in Investing Activities	(265)		(428)
Cash Flows From Financing Activities
Issuance of debt	2,488		—
Repayment of debt	(1,223)		(24)
Issuance of common stock	10		23
Repurchase of common stock	(800)		—
Dividends paid on common stock	(486)		(404)
Distributions to noncontrolling interests	(58)		(77)
Other	(48)		(30)
Net Cash Used in Financing Activities	(117)		(512)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	15		(8)
Net Change in Cash and Cash Equivalents	832		188
Cash and cash equivalents at beginning of period	6,133		3,147
Cash and Cash Equivalents at End of Period	$	6,965	3,335

See Notes to Consolidated Financial Statements.

4

Consolidated Statement of Changes in Equity Phillips 66

	Millions of Dollars
	Three Months Ended March 31
	Attributable to Phillips 66
	Common Stock
	Par Value		Capital in Excess of Par	Treasury Stock	Retained Earnings	Accum. Other Comprehensive Loss	Noncontrolling Interests	Total
December 31, 2022	$	7	19,791	(15,276)	25,432	(460)	4,612	34,106
Net income	—		—	—	1,961	—	116	2,077
Other comprehensive income	—		—	—	—	87	—	87
Dividends paid on common stock ($1.05 per share)	—		—	—	(486)	—	—	(486)
Repurchase of common stock	—		—	(807)	—	—	—	(807)
Benefit plan activity	—		4	—	(4)	—	(3)	(3)
Distributions to noncontrolling interests	—		—	—	—	—	(58)	(58)
March 31, 2023	$	7	19,795	(16,083)	26,903	(373)	4,667	34,916
December 31, 2021	$	7	20,504	(17,116)	16,216	(445)	2,471	21,637
Net income	—		—	—	582	—	75	657
Other comprehensive loss	—		—	—	—	(69)	—	(69)
Dividends paid on common stock ($0.92 per share)	—		—	—	(404)	—	—	(404)
Benefit plan activity	—		32	—	(3)	—	—	29
Distributions to noncontrolling interests	—		—	—	—	—	(77)	(77)
Acquisition of noncontrolling interest in Phillips 66 Partners LP	—		(869)	3,380	—	—	(2,163)	348
March 31, 2022	$	7	19,667	(13,736)	16,391	(514)	306	22,121

	Shares
	Three Months Ended March 31
	Common Stock Issued	Treasury Stock
December 31, 2022	652,373,645	186,529,667
Repurchase of common stock	—	7,874,201
Shares issued—share-based compensation	892,539	—
March 31, 2023	653,266,184	194,403,868
December 31, 2021	650,026,318	211,771,827
Shares issued—share-based compensation	1,020,299	—
Shares issued—acquisition of noncontrolling interest in Phillips 66 Partners LP	—	(41,825,236)
March 31, 2022	651,046,617	169,946,591
See Notes to Consolidated Financial Statements.

5

Notes to Consolidated Financial Statements Phillips 66

Note 1—Interim Financial Information

The unaudited interim financial information presented in the financial statements included in this report is prepared in accordance with generally accepted accounting principles in the United States (GAAP) and includes all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of the consolidated financial position of Phillips 66 and its results of operations and cash flows for the periods presented. Unless otherwise specified, all such adjustments are of a normal and recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our 2022 Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the results expected for the full year.

Note 2—Change in Accounting Principle

Effective January 1, 2023, we adopted ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. At the time of adoption, this ASU did not have a material impact on our consolidated financial statements.

Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger

On August 17, 2022, we and our co-venturer, Enbridge Inc. (Enbridge), agreed to merge DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings), with DCP Midstream as the surviving entity.

Prior to the merger, we and Enbridge each held a 50% interest and jointly governed DCP Midstream, whose primary assets are its general partner and limited partner interests in DCP Midstream, LP (DCP LP), and we each held indirect economic interests in DCP LP of 28.26%. DCP LP is a variable interest entity (VIE) because its limited partners do not have the ability to remove its general partner with a simple majority vote, nor do its limited partners have substantive participating rights in the significant decisions made in the ordinary course of business. DCP Midstream ultimately consolidates DCP LP because one of its wholly owned subsidiaries is the primary beneficiary of DCP LP.

We and Enbridge also held 65% and 35% interests, respectively, in Gray Oak Holdings, whose primary asset was a 65% noncontrolling interest in Gray Oak Pipeline, LLC (Gray Oak Pipeline). Our and Enbridge’s indirect economic interests in Gray Oak Pipeline were 42.25% and 22.75%, respectively. We had voting control over and consolidated Gray Oak Holdings and reported Gray Oak Holdings’ 65% interest in Gray Oak Pipeline as an equity investment and Enbridge’s interest in Gray Oak Holdings as a noncontrolling interest.

In connection with the merger, we and Enbridge entered into a Third Amended and Restated Limited Liability Company Agreement of DCP Midstream (Amended and Restated LLC Agreement), which realigned the members’ economic interests and governance responsibilities. Under the Amended and Restated LLC Agreement, two classes of membership interests in DCP Midstream were created, Class A and Class B, that are intended to track the assets, liabilities, revenues and expenses of the following operating segments of DCP Midstream:

•Class A Segment comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities (DCP Midstream Class A Segment).

•Class B Segment comprised of the business, activities, assets and liabilities of Gray Oak Pipeline (DCP Midstream Class B Segment).

6

We hold a 76.64% Class A membership interest, which represents an indirect economic interest in DCP LP of 43.3%, and a 10% Class B membership interest, which represents an indirect economic interest in Gray Oak Pipeline of 6.5%. Enbridge holds the remaining Class A and Class B membership interests. We have been designated as the managing member of DCP Midstream Class A Segment and are responsible for conducting, directing and managing all activities associated with this segment, except as limited in certain instances. Enbridge has been designated as the managing member of DCP Midstream Class B Segment. Earnings and distributions from each segment are allocated to the members based on their membership interest in each membership class, except as otherwise provided.

DCP Midstream Class A Segment and DCP Midstream Class B Segment were determined to be silos under the variable interest consolidation model. As a result, DCP Midstream was also determined to be a VIE. We determined that we are the primary beneficiary of DCP Midstream Class A Segment because of the governance rights granted to us under the Amended and Restated LLC Agreement as managing member of the segment.

We hold a 33.33% direct ownership interest in DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills). DCP LP holds the remaining 66.67% ownership interest in these entities. As a result of the governance rights granted to us over DCP Midstream Class A Segment and the governance rights we hold through our direct ownership interests, we obtained controlling financial interests in these entities in connection with the merger. As a result, our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased to 62.2% from 52.2%.

Starting on August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. We also began reporting the direct and indirect economic interests held by Enbridge, DCP LP’s public common unitholders and DCP LP’s preferred unitholders as noncontrolling interests on our financial statements.

We account for our remaining indirect economic interest in Gray Oak Pipeline, now held through DCP Midstream Class B Segment, using the equity method of accounting. As a result of the merger, we derecognized Enbridge’s noncontrolling interest in Gray Oak Holdings.

We accounted for our consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills as a business combination using the acquisition method of accounting. See Note 4—Business Combinations, for additional information on our accounting for this transaction. See Note 21—DCP Midstream Class A Segment, for additional information regarding our variable interest in DCP Midstream Class A Segment and the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

7

Note 4—Business Combinations

On August 17, 2022, we realigned our economic interest in, and governance rights over, DCP Midstream and Gray Oak Holdings through the merger of these existing entities with DCP Midstream as the surviving entity. As part of the merger, we transferred a 35.75% indirect economic interest in Gray Oak Pipeline and contributed $404 million of cash to DCP Midstream, which was then paid to Enbridge, in return for a 15.05% incremental indirect economic ownership interest in DCP LP. As noted above, the additional governance rights we were granted as part of this transaction resulted in us consolidating the DCP Midstream Class A Segment, as well as DCP Sand Hills and DCP Southern Hills. Given the nature of this transaction, we have accounted for the consolidation of these entities using the acquisition method of accounting.

The components of the fair value of the merger consideration are:

	Millions of Dollars
Cash contributed	$	404
Fair value of transferred equity interest	634
Fair value of previously held equity interests	3,853
Total merger consideration	$	4,891

The aggregate purchase consideration noted above was allocated to the assets acquired and liabilities assumed of the entities consolidated based upon a preliminary estimate of their fair values as of the August 17, 2022, merger date. Due to the level of effort required to develop fair value measurements, the valuation information necessary to determine the fair values of assets acquired and liabilities assumed is preliminary, including the underlying cash flows, appraisals and other information used to estimate the fair values of the net assets acquired and noncontrolling interests in those net assets. We continue to evaluate the factors used in establishing the fair values of assets and liabilities as of the acquisition date, including, but not limited to, those factors that could affect the estimated fair values of properties, plants and equipment (PP&E), investments in unconsolidated affiliates accounted for under the equity method, inventories, identifiable intangible assets, leases, financial instruments, asset retirement and environmental obligations, legal and tax contingencies, debt and noncontrolling interests. We will complete a final determination of the fair values of assets acquired and liabilities assumed within the one-year measurement period from the date of the merger. Any adjustments made in subsequent periods could be material to the preliminary values.

8

The following table shows the preliminary purchase price allocation as of the date of the merger, and cumulative adjustments we have made as of March 31, 2023:

	Millions of Dollars
	As Originally Reported		Adjustments	As Adjusted
Fair value of assets acquired:
Cash and cash equivalents	$	98	—	98
Accounts and notes receivable	1,003		—	1,003
Inventories	74		166	240
Prepaid expenses and other current assets	439		—	439
Investments and long-term receivables	2,192		57	2,249
Properties, plants and equipment	12,837		13	12,850
Intangibles	36		(36)	—
Other assets	343		(158)	185
Total assets acquired	17,022		42	17,064
Fair value of liabilities assumed:
Accounts payable	912		—	912
Short-term debt	625		(2)	623
Accrued income and other taxes	107		(11)	96
Employee benefit obligation—current	50		22	72
Other accruals	497		(21)	476
Long-term debt	4,541		40	4,581
Asset retirement obligations and accrued environmental costs	168		16	184
Deferred income taxes	40		14	54
Employee benefit obligations	54		—	54
Other liabilities and deferred credits	227		(5)	222
Total liabilities assumed	7,221		53	7,274
Fair value of net assets	9,801		(11)	9,790
Less: Fair value of noncontrolling interests	4,910		(11)	4,899
Total merger consideration	$	4,891	—	4,891

The adjustments reflected in the table above include reclassification adjustments we have made to the preliminary purchase price allocation to conform with our historical presentation and adjustments we have made to the estimated fair value of certain assets acquired and liabilities assumed. The adjustments recorded in the three months ended March 31, 2023, were not material.

Pending Acquisition

On April 10, 2023, we entered into an agreement to acquire certain marketing assets on the U.S. West Coast for cash consideration of approximately $260 million plus an adjustment for net working capital that will be determined at closing. The transaction is expected to close in the second or early third quarter of 2023, subject to regulatory approval and completion of other customary closing conditions.

9

Note 5—Sales and Other Operating Revenues

Disaggregated Revenues

The following tables present our disaggregated sales and other operating revenues:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Product Line and Services
Refined petroleum products	$	24,718	29,382
Crude oil resales	4,565		3,755
Natural gas liquids (NGL) and natural gas	4,421		3,230
Services and other*	692		(188)
Consolidated sales and other operating revenues	$	34,396	36,179
Geographic Location**
United States	$	27,065	28,885
United Kingdom	3,930		3,640
Germany	1,306		1,382
Other countries	2,095		2,272
Consolidated sales and other operating revenues	$	34,396	36,179
* Includes derivatives-related activities. See Note 14—Derivatives and Financial Instruments, for additional information.
** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues.

Contract-Related Assets and Liabilities

At March 31, 2023, and December 31, 2022, receivables from contracts with customers were $7,317 million and $8,749 million, respectively. Significant noncustomer balances, such as buy/sell receivables and excise tax receivables, were excluded from these amounts.

Our contract-related assets also include payments we make to our marketing customers related to incentive programs. An incentive payment is initially recognized as an asset and subsequently amortized as a reduction to revenue over the contract term, which generally ranges from 5 to 15 years. At March 31, 2023, and December 31, 2022, our asset balances related to such payments were $509 million and $505 million, respectively.

Our contract liabilities represent advances from our customers prior to product or service delivery. At March 31, 2023, and December 31, 2022, contract liabilities were $203 million and $156 million, respectively.

Remaining Performance Obligations

Most of our contracts with customers are spot contracts or term contracts with only variable consideration. We do not disclose remaining performance obligations for these contracts as the expected duration is one year or less or because the variable consideration has been allocated entirely to an unsatisfied performance obligation. We also have certain contracts in our Midstream segment that include minimum volume commitments with fixed pricing. At March 31, 2023, the remaining performance obligations related to these minimum volume commitment contracts amounted to $446 million. This amount excludes variable consideration and estimates of variable rate escalation clauses in our contracts with customers, and is expected to be recognized through 2031 with a weighted average remaining life of three years as of March 31, 2023.

10

Note 6—Credit Losses

We are exposed to credit losses primarily through our sales of refined petroleum products, crude oil, NGL and natural gas. We assess each counterparty’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the counterparty’s established credit rating or our assessment of the counterparty’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risk, and business strategy in our evaluation. A credit limit is established for each counterparty based on the outcome of this review. We may require collateralized asset support or a prepayment to mitigate credit risk.

We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities include timely account reconciliations, dispute resolution and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. In addition, when events and circumstances arise that may affect certain counterparties’ abilities to fulfill their obligations, we enhance our credit monitoring, and we may seek collateral to support some transactions or require prepayments from higher-risk counterparties.

At March 31, 2023, and December 31, 2022, we reported $9,326 million and $10,985 million of accounts and notes receivable, respectively, net of allowances of $67 million for both periods. Based on an aging analysis at March 31, 2023, more than 95% of our accounts receivable were outstanding less than 60 days.

We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt and standby letters of credit. See Note 12—Guarantees, and Note 13—Contingencies and Commitments, for more information on these off-balance sheet exposures.

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Note 7—Inventories

Inventories consisted of the following:

	Millions of Dollars
	March 31 2023		December 31 2022
Crude oil and petroleum products	$	5,046	2,914
Materials and supplies	399		362
	$	5,445	3,276

Inventories valued on the last-in, first-out (LIFO) basis totaled $4,837 million and $2,635 million at March 31, 2023, and December 31, 2022, respectively. The estimated excess of current replacement cost over LIFO cost of inventories amounted to approximately $6 billion and $6.3 billion at March 31, 2023, and December 31, 2022, respectively.

Certain planned reductions in inventory that are not expected to be replaced by the end of the year cause liquidations of LIFO inventory values. LIFO inventory liquidations increased our net income by $4 million and $40 million in the three months ended March 31, 2023 and 2022, respectively.

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Note 8—Investments, Loans and Long-Term Receivables

Equity Investments

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

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 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 Court) denied Dakota Access’ writ of certiorari requesting the Court to review the lower court’s decision to order the EIS and vacate the easement. Therefore, the requirement to prepare the EIS stands. 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 release is expected in the second quarter of 2023.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access in March 2019. On April 1, 2022, Dakota Access’ wholly owned subsidiary repaid $650 million aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25% share, or $163 million, with a capital contribution of $89 million in March 2022 and $74 million of distributions we elected not to receive from Dakota Access in the first quarter of 2022. At March 31, 2023, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $1.85 billion.

In conjunction with the notes offering, Phillips 66 Partners LP (Phillips 66 Partners), now a wholly owned subsidiary of Phillips 66, and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU). Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation. At March 31, 2023, our 25% share of the maximum potential equity contributions under the CECU was approximately $467 million.

If the pipeline is required to cease operations, and should Dakota Access and ETCO not have sufficient funds to pay ongoing expenses, we could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $20 million annually, in addition to the potential obligations under the CECU at March 31, 2023.

At March 31, 2023, the aggregate book value of our investments in Dakota Access and ETCO was $659 million.

CF United LLC (CF United)

We own a 50% voting interest and a 47% economic interest in CF United, a retail marketing joint venture with operations primarily on the U.S. West Coast. CF United is considered a VIE because our co-venturer has an option to require us to purchase its interest based on a fixed multiple. The put option becomes effective July 1, 2023, and expires on March 31, 2024. The put option is viewed as a variable interest as the purchase price on the exercise date may not represent the then-current fair value of CF United. We have determined that we are not the primary beneficiary because we and our co-venturer jointly direct the activities of CF United that most significantly impact economic performance. At March 31, 2023, our maximum exposure to loss was comprised of our $292 million investment in CF United, and any potential future loss resulting from the put option should the purchase price based on a fixed multiple exceed the then-current fair value of CF United.

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OnCue Holdings, LLC (OnCue)

We hold a 50% interest in OnCue, a joint venture that owns and operates retail convenience stores. We fully guaranteed various debt agreements of OnCue and our co-venturer did not participate in the guarantees. This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses. We have determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance. At March 31, 2023, our maximum exposure to loss was $213 million, which represented the book value of our investment in OnCue of $145 million and guaranteed debt obligations of $68 million.

DCP Midstream, DCP Sand Hills, DCP Southern Hills, and Gray Oak Pipeline—Prior to the merger of DCP Midstream and Gray Oak Holdings on August 17, 2022, we held:

•A 50% interest in DCP Midstream a joint venture that owns and operates NGL and gas pipelines, gas plants, gathering systems, storage facilities and fractionation plants, through its subsidiary DCP LP.

•A 33.33% direct ownership interest in DCP Sand Hills a joint venture that owns a NGL pipeline system that extends from the Permian Basin and Eagle Ford to facilities on the Texas Gulf Coast and to the Mont Belvieu, Texas, market hub.

•A 33.33% direct ownership interest in DCP Southern Hills a joint venture that owns a NGL pipeline system that extends from the Midcontinent region to the Mont Belvieu, Texas, market hub.

•A 65% interest in Gray Oak Pipeline, which was held through a consolidated holding company, Gray Oak Holdings. Our indirect interest in Gray Oak Pipeline was 42.25%, after considering a co-venturer’s 35% interest in Gray Oak Holdings. Gray Oak Pipeline is a crude oil pipeline that extends from the Permian and Eagle Ford to Texas Gulf Coast destinations that include Corpus Christi, Texas, and the Sweeny area, including our Sweeny Refinery.

Other Investments

In September 2021, we acquired 78 million ordinary shares, representing a 16% ownership interest, in NOVONIX Limited (NOVONIX), which are traded on the Australian Securities Exchange. NOVONIX is a Brisbane, Australia-based company that develops technology and supplies materials for lithium-ion batteries. Since we do not have significant influence over the operating and financial policies of NOVONIX and the shares we own have a readily determinable fair value, our investment is recorded at fair value at the end of each reporting period. The fair value of our investment is recorded in the “Investments and long-term receivables” line item on our consolidated balance sheet. The change in the fair value of our investment due to fluctuations in NOVONIX’s stock price, or unrealized investment losses, is recorded in the “Other income (loss)” line item of our consolidated statement of income, while changes due to foreign currency fluctuations are recorded in the “Foreign currency transaction (gains) losses” line item on our consolidated statement of income. The fair value of our investment in NOVONIX was $66 million at March 31, 2023. The fair value of our investment in NOVONIX declined by $12 million during the three months ended March 31, 2023, reflecting an unrealized investment loss of $11 million and an unrealized foreign currency loss of $1 million. See Note 15—Fair Value Measurements, for additional information regarding the recurring fair value measurement of our investment in NOVONIX.

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Note 9—Properties, Plants and Equipment

Our gross investment in PP&E and the associated accumulated depreciation and amortization (Accum. D&A) balances were as follows:

	Millions of Dollars
	March 31, 2023				December 31, 2022
	Gross PP&E		Accum. D&A	Net PP&E	Gross PP&E	Accum. D&A	Net PP&E
Midstream	$	25,549	3,743	21,806	25,422	3,524	21,898
Chemicals	—		—	—	—	—	—
Refining	24,236		12,500	11,736	24,200	12,523	11,677
Marketing and Specialties	1,829		1,095	734	1,800	1,058	742
Corporate and Other	1,580		745	835	1,568	722	846
	$	53,194	18,083	35,111	52,990	17,827	35,163

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Note 10—Earnings Per Share

The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, adjusted for noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.

	Three Months Ended March 31
	2023			2022
	Basic		Diluted	Basic	Diluted
Amounts Attributed to Phillips 66 Common Stockholders (millions):
Net Income Attributable to Phillips 66	$	1,961	1,961	582	582
Income allocated to participating securities	(3)		(1)	(2)	(2)
Net income available to common stockholders	$	1,958	1,960	580	580
Weighted-average common shares outstanding (thousands):	462,870		464,810	447,206	449,298
Effect of share-based compensation	1,940		2,224	2,092	713
Weighted-average common shares outstanding—EPS	464,810		467,034	449,298	450,011
Earnings Per Share of Common Stock (dollars)	$	4.21	4.20	1.29	1.29

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Note 11—Debt

Debt Issuances and Repayments

On March 29, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.25 billion aggregate principal amount of senior unsecured notes consisting of:

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

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

The 2027 Notes and 2033 Notes (collectively, the Notes) are fully and unconditionally guaranteed by Phillips 66. Interest on the 2027 Notes is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2023. Interest on the 2033 Notes is payable semi-annually on June 30 and December 30 of each year, commencing on December 30, 2023.

The Notes are required to be redeemed at a price equal to 101% of the principal amount, plus accrued and unpaid interest, at the earliest occurrence of any of the following events: the DCP LP public common unit acquisition is not completed on or prior to December 31, 2023; the agreement to acquire the DCP LP public common units is terminated; or we notify the trustee of the notes in writing that the DCP LP public common unit acquisition will not be consummated on or prior to December 31, 2023. See Note 21—DCP Midstream Class A Segment, for additional information regarding the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

On March 15, 2023, DCP LP repaid its 3.875% senior unsecured notes due March 2023 with an aggregate principal amount of $500 million using borrowings under its revolving credit and accounts receivable securitization facilities.

On April 19, 2023, DCP LP announced its intent to redeem its 5.850% junior subordinated notes due May 2043 with an aggregate principal amount outstanding of $550 million on or about May 21, 2023. DCP LP expects to use borrowings under its revolving credit and accounts receivable securitization facilities.

Term Loan Agreement

On March 27, 2023 (the Closing Date), Phillips 66 Company, a wholly owned subsidiary of Phillips 66, entered into a $1.5 billion delayed draw term loan agreement guaranteed by Phillips 66 (the Term Loan Agreement). The Term Loan Agreement provides for a single borrowing (the date of such borrowing, the Funding Date) during a 90-day period commencing on the Closing Date, contingent upon us completing the DCP LP public common unit acquisition, and matures on the third anniversary of the Funding Date. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement will bear interest at either: (a) Adjusted Term SOFR in effect from time to time plus the applicable margin; or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement. As of March 31, 2023, no borrowings are outstanding under the Term Loan Agreement.

See Note 21—DCP Midstream Class A Segment, for additional information regarding the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On June 23, 2022, we entered into a $5 billion revolving credit facility with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. At both March 31, 2023, and December 31, 2022, no amount had been drawn under the $5 billion revolving credit facility or $5 billion uncommitted commercial paper program.

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DCP Midstream Class A Segment

At March 31, 2023, DCP LP had $225 million of borrowings outstanding under its $1.4 billion credit facility and $2 million of letters of credit had been issued that supported the credit facility. At December 31, 2022, DCP LP had no borrowings outstanding under its $1.4 billion credit facility, and $10 million in letters of credit had been issued that are supported by the credit facility.

As of March 31, 2023, and December 31, 2022, $350 million and $40 million of borrowings, respectively, were outstanding under DCP LP’s accounts receivable securitization facility, which are secured by its accounts receivable at DCP Receivables LLC.

Note 12—Guarantees

At March 31, 2023, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantees and expect future performance to be either immaterial or have only a remote chance of occurrence.

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 March 31, 2023. We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $164 million. These leases have remaining terms of five to ten years.

Guarantees of Joint Venture Obligations

In March 2019, Phillips 66 Partners and its co-venturers in Dakota Access provided a CECU in conjunction with a senior unsecured notes offering. See Note 8—Investments, Loans and Long-Term Receivables, for additional information on Dakota Access and the CECU.

At March 31, 2023, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to three years. The maximum potential future exposures under these guarantees were approximately $83 million. Payment would be required if a joint venture defaults on its obligations.

Indemnifications

Over the years, we have entered into various agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to indemnifications. Agreements associated with these sales include indemnifications for taxes, litigation, environmental liabilities, permits and licenses, employee claims, and real estate tenant defaults. The provisions of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, which generally have indefinite terms and potentially unlimited exposure. At March 31, 2023, and December 31, 2022, the carrying amount of recorded indemnifications was $134 million and $137 million, respectively.

We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information to support the reversal. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. At March 31, 2023, and December 31, 2022, environmental accruals for known contamination of $105 million and $108 million, respectively, were included in the carrying amount of the recorded indemnifications noted above. These environmental accruals were primarily included in the “Asset retirement obligations and accrued environmental costs” line item on our consolidated balance sheet. For additional information about environmental liabilities, see Note 13—Contingencies and Commitments.

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Indemnification and Release Agreement

In 2012, in connection with our separation from ConocoPhillips, we entered into an Indemnification and Release Agreement. This agreement governs the treatment between ConocoPhillips and us of matters relating to indemnification, insurance, litigation responsibility and management, and litigation document sharing and cooperation arising in connection with the separation. Generally, the agreement provides for cross indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of ConocoPhillips’ business with ConocoPhillips. The agreement also establishes procedures for handling claims subject to indemnification and related matters.

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Note 13—Contingencies and Commitments

A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental

We are subject to international, federal, state and local environmental laws and regulations. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using information available at the time. We measure estimates and base contingent liabilities on currently available facts, existing technology and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring contingent environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the EPA or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

Although liability for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies alleged to have liability at a particular site. Due to such joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites for which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit, although some of the indemnifications are subject to dollar and time limits.

We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except those pertaining to sites acquired in a business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. At March 31, 2023, our total environmental accruals were $439 million, compared with $434 million at December 31, 2022. We expect to incur a substantial amount of these expenditures within the next 30 years. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

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Legal Proceedings

Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.

Other Contingencies

We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized.

At March 31, 2023, we had performance obligations secured by letters of credit and bank guarantees of $749 million related to various purchase and other commitments incident to the ordinary conduct of business.

Note 14—Derivatives and Financial Instruments

Derivative Instruments

We use financial and commodity-based derivative contracts to manage exposures to fluctuations in commodity prices, interest rates and foreign currency exchange rates, or to capture market opportunities. Because we do not apply hedge accounting for commodity derivative contracts, all realized and unrealized gains and losses from commodity derivative contracts are recognized in our consolidated statement of income. Gains and losses from derivative contracts held for trading not directly related to our physical business are reported net in the “Other income (loss)” line item on our consolidated statement of income. Cash flows from all our derivative activity for the periods presented appear in the operating section on our consolidated statement of cash flows.

Purchase and sales contracts with firm minimum notional volumes for commodities that are readily convertible to cash are recorded on our consolidated balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception, whereby the contracts are recorded on an accrual basis. We generally apply the normal purchases and normal sales exception to eligible crude oil, refined petroleum product, NGL, natural gas, renewable feedstock, and power commodity contracts to purchase or sell quantities we expect to use or sell in the normal course of business. All other derivative instruments are recorded at fair value on our consolidated balance sheet. For further information on the fair value of derivatives, see Note 15—Fair Value Measurements.

Commodity Derivative Contracts—We sell into or receive supply from the worldwide crude oil, refined petroleum product, NGL, natural gas, renewable feedstock, and electric power markets, exposing our revenues, purchases, cost of operating activities and cash flows to fluctuations in the prices for these commodities. Generally, our policy is to remain exposed to the market prices of commodities; however, we use futures, forwards, swaps and options in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited amount of trading not directly related to our physical business, all of which may reduce our exposure to fluctuations in market prices. We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades.

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DCP Midstream Class A Segment

Through DCP LP’s operations, DCP Midstream Class A Segment is exposed to a variety of risks including but not limited to changes in the prices of commodities that DCP LP buys or sells. Effective from the date of the merger, we include DCP LP’s financial instruments in our financial statements. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger, for additional information regarding the merger and the associated accounting treatment.

The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities. The balances in the following table are presented on a gross basis, before the effects of counterparty and collateral netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our consolidated balance sheet when the legal right of offset exists.

	Millions of Dollars
	March 31, 2023					December 31, 2022
	Commodity Derivatives			Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet	Commodity Derivatives		Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet
	Assets		Liabilities			Assets	Liabilities
Assets
Prepaid expenses and other current assets	$	3,008	(2,834)	(1)	173	1,331	(1,110)	—	221
Other assets	29		(4)	—	25	46	(1)	—	45
Liabilities
Other accruals	27		(144)	15	(102)	471	(750)	90	(189)
Other liabilities and deferred credits	24		(23)	—	1	12	(35)	—	(23)
Total	$	3,088	(3,005)	14	97	1,860	(1,896)	90	54

At March 31, 2023, there was $32 million of collateral paid that was not offset on our consolidated balance sheet. At December 31, 2022, there was $93 million of cash collateral paid that was not offset on our consolidated balance sheet.

The realized and unrealized gains (losses) incurred from commodity derivatives, and the line items where they appear on our consolidated statement of income, were:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Sales and other operating revenues	$	50	(420)
Other income (loss)	(14)		25
Purchased crude oil and products	137		(228)
Net gain (loss) from commodity derivative activity	$	173	(623)

The following table summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying operations. The underlying exposures may be from nonderivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward purchase and sales contracts. The percentage of our derivative contract volumes expiring within the next 12 months was more than 90% at March 31, 2023, and December 31, 2022.

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	Open Position Long / (Short)
	March 31 2023	December 31 2022
Commodity
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels)	(37)	(25)
Natural gas (billions of cubic feet)	(37)	(77)

Credit Risk from Derivative and Financial Instruments

Financial instruments potentially exposed to concentrations of credit risk consist primarily of trade receivables and derivative contracts.

Our trade receivables result primarily from the sale of products from, or related to, our refinery operations and reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have payment terms of 30 days or less. We continually monitor this exposure and the creditworthiness of the counterparties and recognize bad debt expense based on a probability assessment of credit loss. Generally, we do not require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments or master netting arrangements to mitigate credit risk with counterparties that both buy from and sell to us, as these agreements permit the amounts owed by us to others to be offset against amounts owed to us.

The credit risk from our derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction. Individual counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps and option contracts that have a negligible credit risk because these trades are cleared with an exchange clearinghouse and subject to mandatory margin requirements, typically on a daily basis, until settled.

Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable threshold amounts that are contingent on our credit ratings. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if our credit ratings fall below investment grade. Cash is the primary collateral in all contracts; however, many contracts also permit us to post letters of credit as collateral.

The aggregate fair values of all derivative instruments with such credit-risk-related contingent features that were in a liability position were immaterial at March 31, 2023, and December 31, 2022.

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Note 15—Fair Value Measurements

Recurring Fair Value Measurements

We carry certain assets and liabilities at fair value, which we measure at the reporting date using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:

•Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.

•Level 2: Fair value measured either with: (1) adjusted quoted prices from an active market for similar assets or liabilities; or (2) other valuation inputs that are directly or indirectly observable.

•Level 3: Fair value measured with unobservable inputs that are significant to the measurement.

We classify the fair value of an asset or liability based on the significance of its observable or unobservable inputs to the measurement. However, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable.

We used the following methods and assumptions to estimate the fair value of financial instruments:

•Cash and cash equivalents—The carrying amount reported on our consolidated balance sheet approximates fair value.

•Accounts and notes receivable—The carrying amount reported on our consolidated balance sheet approximates fair value.

•Derivative instruments—The fair value of our exchange-traded contracts is based on quoted market prices obtained from the New York Mercantile Exchange, the Intercontinental Exchange or other exchanges, and is reported as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity, or are valued using either adjusted exchange-provided prices or nonexchange quotes, we classify those contracts as Level 2 or Level 3 based on the degree to which inputs are observable.

Physical commodity forward purchase and sales contracts and over-the-counter (OTC) financial swaps are generally valued using forward quotes provided by brokers and price index developers, such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. When forward market prices are not available, we estimate fair value using the forward price of a similar commodity, adjusted for the difference in quality or location. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, physical commodity purchase and sales contracts and OTC swaps are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Physical and OTC commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or 3. We use a midmarket pricing convention (the midpoint between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.

We determine the fair value of interest rate swaps based on observable market valuations for interest rate swaps that have notional amounts, terms and pay and reset frequencies similar to ours.

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•Rabbi trust assets—These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.

•Investment in NOVONIX—Our investment in NOVONIX is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.

•Other investments—Includes other marketable securities with observable market prices.

•Debt—The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated primarily based on observable market prices.

The following tables display the fair value hierarchy for our financial assets and liabilities either accounted for or disclosed at fair value on a recurring basis. These values are determined by treating each contract as the fundamental unit of account; therefore, derivative assets and liabilities with the same counterparty are shown on a gross basis in the hierarchy sections of these tables, before the effects of counterparty and collateral netting. The following tables also reflect the effect of netting derivative assets and liabilities with the same counterparty for which we have the legal right of offset and collateral netting.

The carrying values and fair values by hierarchy of our financial assets and liabilities, either carried or disclosed at fair value, including any effects of counterparty and collateral netting, were:

	Millions of Dollars
	March 31, 2023
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	2,914	76	2	2,992	(2,867)	(1)	—	124
OTC instruments	—		13	13	26	—	—	—	26
Physical forward contracts	—		68	2	70	(22)	—	—	48
Rabbi trust assets	179		—	—	179	N/A	N/A	—	179
Investment in NOVONIX	66		—	—	66	N/A	N/A	—	66
	$	3,159	157	17	3,333	(2,889)	(1)	—	443
Commodity Derivative Liabilities
Exchange-cleared instruments	$	2,883	82	2	2,967	(2,867)	(15)	—	85
OTC instruments	—		4	—	4	—	—	—	4
Physical forward contracts	—		34	—	34	(22)	—	—	12
Floating-rate debt	—		600	—	600	N/A	N/A	—	600
Fixed-rate debt, excluding finance leases and software obligations	—		16,919	—	16,919	N/A	N/A	696	17,615
	$	2,883	17,639	2	20,524	(2,889)	(15)	696	18,316

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	Millions of Dollars
	December 31, 2022
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	1,615	130	3	1,748	(1,582)	—	—	166
OTC instruments	—		7	16	23	—	—	—	23
Physical forward contracts	—		86	3	89	(12)	—	—	77
Rabbi trust assets	126		—	—	126	N/A	N/A	—	126
Investment in NOVONIX	78		—	—	78	N/A	N/A	—	78
Other investments	42		1	—	43	N/A	N/A	—	43
	$	1,861	224	22	2,107	(1,594)	—	—	513
Commodity Derivative Liabilities
Exchange-cleared instruments	$	1,676	164	5	1,845	(1,582)	(90)	—	173
OTC instruments	—		9	—	9	—	—	—	9
Physical forward contracts	—		42	—	42	(12)	—	—	30
Floating-rate debt	—		65	—	65	N/A	N/A	—	65
Fixed-rate debt, excluding finance leases and software obligations	—		15,871	—	15,871	N/A	N/A	977	16,848
	$	1,676	16,151	5	17,832	(1,594)	(90)	977	17,125

The rabbi trust assets and investment in NOVONIX are recorded in the “Investments and long-term receivables” line item, and floating-rate and fixed-rate debt are recorded in the “Short-term debt” and “Long-term debt” line items on our consolidated balance sheet. See Note 14—Derivatives and Financial Instruments, for information regarding where the assets and liabilities related to our commodity derivatives are recorded on our consolidated balance sheet.

Nonrecurring Fair Value Measurements

DCP Midstream and Gray Oak Holdings Merger

On August 17, 2022, we and Enbridge agreed to merge DCP Midstream and Gray Oak Holdings with DCP Midstream as the surviving entity. As a result, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills, and accordingly, accounted for the business combination using the acquisition method of accounting, which requires DCP Midstream Class A Segment’s, DCP Sand Hills’ and DCP Southern Hills’, assets and liabilities to be recorded at fair value as of the acquisition date on our consolidated balance sheet. See Note 4—Business Combinations, for additional information on the merger transaction.

Equity Investments

The preliminary fair value of the investments we acquired that are accounted for under the equity method was $2,215 million. The preliminary fair value of these assets was determined using the income approach. The income approach used discounted cash flow models that require various observable and non-observable inputs, such as margins, tariffs and rates, utilization, volumes, product costs, operating expenses, capital expenditures, terminal-year values and risk-adjusted discount rates. These valuations resulted in Level 3 nonrecurring fair value measurements.

PP&E

The preliminary fair value of PP&E was $12,850 million. The preliminary fair value of these assets was determined primarily using the cost approach. The cost approach used assumptions for the current replacement costs of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence. The estimated fair value of properties was determined using a sales comparison approach. These valuations resulted in Level 3 nonrecurring fair value measurements.

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Debt

The preliminary fair value of DCP LP’s senior and junior subordinated notes was measured using a market approach, based on the average of quotes for the acquired debt from major financial institutions. These valuations resulted in Level 2 nonrecurring fair value measurements.

Noncontrolling Interests

As a result of our consolidation of the DCP Midstream Class A Segment, the noncontrolling interests held in the DCP Midstream Class A Segment were recorded at their estimated fair values on the merger date. These noncontrolling interests primarily include Enbridge’s indirect economic interest in DCP LP, the public holders of DCP LP’s common units and the holders of DCP LP’s preferred units. The fair value of the noncontrolling interests in DCP LP’s common units was based on their unit market price as of the date of the merger, August 17, 2022. The fair value of the noncontrolling interests in DCP LP’s publicly traded preferred units was based on their respective market price as of the date of the merger, August 17, 2022. These valuations resulted in Level 1 nonrecurring fair value measurements. The preliminary fair value of the noncontrolling interests in DCP LP’s other preferred units was based on an income approach that used projected distributions that were discounted using an average implied yield of DCP LP’s publicly traded preferred units and expected redemption dates. This valuation resulted in a Level 2 nonrecurring fair value measurement.

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Note 16—Pension and Postretirement Plans

The components of net periodic benefit cost for the three months ended March 31, 2023 and 2022, were as follows:

	Millions of Dollars
	Pension Benefits					Other Benefits
	2023			2022		2023	2022
	U.S.		Int’l.	U.S.	Int’l.
Components of Net Periodic Benefit Cost
Three Months Ended March 31
Service cost	$	27	3	35	8	1	1
Interest cost	29		8	21	6	2	1
Expected return on plan assets	(31)		(10)	(39)	(16)	—	—
Amortization of net actuarial loss (gain)	3		(1)	6	3	(2)	(1)
Settlements	10		—	1	—	—	—
Net periodic benefit cost*	$	38	—	24	1	1	1
* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.

During the three months ended March 31, 2023, we contributed $29 million to our U.S. pension and other postretirement benefit plans and $5 million to our international pension plans. We currently expect to make additional contributions of approximately $40 million to our U.S. pension and other postretirement benefit plans and approximately $15 million to our international pension plans during the remainder of 2023.

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Note 17—Accumulated Other Comprehensive Loss

Changes in the balances of each component of accumulated other comprehensive loss were as follows:

	Millions of Dollars
	Defined Benefit Plans		Foreign Currency Translation	Hedging	Accumulated Other Comprehensive Loss
December 31, 2022	$	(122)	(336)	(2)	(460)
Other comprehensive income before reclassifications	2		77	—	79
Amounts reclassified from accumulated other    comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss and settlements	8		—	—	8
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income	10		77	—	87
March 31, 2023	$	(112)	(259)	(2)	(373)
December 31, 2021	$	(398)	(45)	(2)	(445)
Other comprehensive income (loss) before reclassifications	4		(82)	—	(78)
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss, prior service credit and settlements	9		—	—	9
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income (loss)	13		(82)	—	(69)
March 31, 2022	$	(385)	(127)	(2)	(514)
* Included in the computation of net periodic benefit cost. See Note 16—Pension and Postretirement Plans, for additional information.

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Note 18—Related Party Transactions

Significant transactions with related parties were:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Operating revenues and other income (a)(d)	$	1,304	1,340
Purchases (b)(d)	3,699		4,681
Operating expenses and selling, general and administrative expenses (c)	72		70

(a)We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), NGL and certain feedstocks to DCP Midstream, gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the Marketing and Specialties (M&S) segment, including OnCue and CF United. We also sold certain feedstocks and intermediate products to WRB Refining LP (WRB) and acted as an agent for WRB in supplying crude oil and other feedstocks for a fee. In addition, we charged several of our equity affiliates, including CPChem, for the use of common facilities, such as steam generators, waste and water treaters and warehouse facilities.

(b)We purchased crude oil, refined petroleum products, NGL and solvents from WRB. We also purchased natural gas and NGL from DCP Midstream and CPChem, as well as other feedstocks from various equity affiliates, for use in our refinery and fractionation processes. In addition, we purchased base oils and fuel products from Excel Paralubes for use in our specialty and refining businesses. We paid NGL fractionation fees to CPChem. We also paid fees to various pipeline equity affiliates for transporting crude oil, refined petroleum products and NGL.

(c)We paid consignment fees to CF United, and utility and processing fees to various equity affiliates.

(d)As a result of the DCP Midstream and Gray Oak Holdings merger, we began consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. As a result, transactions with these parties after August 17, 2022, are not presented in the table above.

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Note 19—Segment Disclosures and Related Information

Effective October 1, 2022, we changed the organizational structure of the internal financial information reviewed by our President and Chief Executive Officer, and determined this resulted in a change in the composition of our operating segments. As part of the realignment, we moved the results and net assets of our Merey Sweeny vacuum distillation and delayed coker units at our Sweeny Refinery and the isomerization unit at our Lake Charles Refinery from our Midstream segment to our Refining segment. Additionally, commissions charged to the Refining segment by the M&S segment related to sales of specialty products were eliminated and the costs of the sales organization were reclassified from the M&S segment to the Refining segment. The segment realignment is presented for the three months ended March 31, 2023, with prior periods recast for comparability.

Our operating segments are:

1)Midstream—Provides natural gas and NGL transportation, storage, fractionation, gathering, processing and marketing services, as well as crude oil and refined petroleum product transportation, terminaling and processing services, mainly in the United States. As a result of the merger on August 17, 2022, we began consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. On March 9, 2022, we also completed the merger between us and Phillips 66 Partners. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and Note 22—Phillips 66 Partners LP, for additional information on these transactions. This segment also includes our 16% investment in NOVONIX.

2)Chemicals—Consists of our 50% equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.

3)Refining—Refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, at 12 refineries in the United States and Europe.

4)Marketing and Specialties—Purchases for resale and markets refined petroleum products and renewable fuels, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

Corporate and Other includes general corporate overhead, interest expense, our investment in research of new technologies and various other corporate activities. Corporate assets include all cash, cash equivalents and income tax-related assets. Corporate and Other also includes restructuring costs related to our business transformation. See Note 23—Restructuring for additional information regarding restructuring costs.

Intersegment sales are at prices that we believe approximate market.

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Analysis of Results by Operating Segment

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Sales and Other Operating Revenues*
Midstream
Total sales	$	5,292	4,022
Intersegment eliminations	(695)		(826)
Total Midstream	4,597		3,196
Chemicals	—		—
Refining
Total sales	22,341		24,141
Intersegment eliminations	(14,095)		(15,576)
Total Refining	8,246		8,565
Marketing and Specialties
Total sales	22,399		25,211
Intersegment eliminations	(855)		(798)
Total Marketing and Specialties	21,544		24,413
Corporate and Other	9		5
Consolidated sales and other operating revenues	$	34,396	36,179
* See Note 5—Sales and Other Operating Revenues, for further details on our disaggregated sales and other operating revenues.
Income (Loss) Before Income Taxes
Midstream	$	702	212
Chemicals	198		396
Refining	1,608		173
Marketing and Specialties	426		296
Corporate and Other	(283)		(249)
Consolidated income before income taxes	$	2,651	828

	Millions of Dollars
	March 31 2023		December 31 2022
Total Assets
Midstream	$	29,358	30,273
Chemicals	6,981		6,785
Refining	22,750		21,581
Marketing and Specialties	9,443		9,939
Corporate and Other	8,730		7,864
Consolidated total assets	$	77,262	76,442

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Note 20—Income Taxes

Our effective income tax rate for the three months ended March 31, 2023, was 22%, compared with 21% for the corresponding period of 2022. The increase in our effective tax rate for the three months ended March 31, 2023, was primarily attributable to non-taxable foreign earnings of our chemical joint venture and an increase in foreign tax rate.

The effective tax rate for the three months ended March 31, 2023, varied from the U.S. federal statutory income tax rate primarily due to state income taxes, partially offset by the impact of foreign operations and noncontrolling interest.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA) that includes, among other provisions, changes to the U.S. corporate income tax system, including 15% minimum tax based on adjusted financial statement income as defined in the IRA, which was effective after December 31, 2022. We do not anticipate owing 2023 corporate alternative minimum tax as the regular U.S. tax liability is forecasted to exceed the corporate alternative minimum tax.

Note 21—DCP Midstream Class A Segment

DCP Midstream Class A Segment is a VIE and we are the primary beneficiary. DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities. Refer to Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and Note 4—Business Combinations, for more details on the DCP Midstream and Gray Oak Holdings merger transaction and related accounting.

DCP LP, headquartered in Denver, Colorado, is a publicly traded master limited partnership whose operations currently include producing and fractionating NGL, gathering, compressing, treating and processing natural gas; recovering condensate; and transporting, trading, marketing and storing natural gas and NGL.

As a result of our consolidation of DCP Midstream Class A Segment, the public common and preferred unitholders’ ownership interests and Enbridge’s indirect economic interest in DCP LP are reflected as noncontrolling interests in our consolidated financial statements. At March 31, 2023, we held a 43.3% indirect economic interest in DCP LP.

The most significant assets of DCP Midstream Class A Segment that are available to settle only its obligations, along with its most significant liabilities for which its creditors do not have recourse to Phillips 66’s general credit, were:

	Millions of Dollars
	March 31 2023		December 31 2022
Accounts receivable, trade*	$	713	988
Net properties, plants and equipment	9,280		9,297
Investments in unconsolidated affiliates**	2,182		2,161
Accounts payable	755		1,239
Short-term debt	4		504
Long-term debt	4,808		4,248

* Included in the “Accounts and notes receivable” line item on the Phillips 66 consolidated balance sheet.

** Included in the “Investments and long-term receivables” line item on the Phillips 66 consolidated balance sheet.

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Preferred Units

DCP LP’s preferred units rank senior to its common units with respect to distribution rights and rights upon liquidations. Holders of DCP LP’s preferred units have no voting rights except for certain limited protective voting rights. Distributions on the preferred units are payable out of DCP LP’s available cash, are accretive and are cumulative from the date of original issuance of the preferred units.

Distributions on the Series B preferred units are payable quarterly in arrears in March, June, September and December of each year. Distributions on the Series C preferred units are payable quarterly in arrears in January, April, July and October of each year. During the three months ended March 31, 2023, DCP LP made cash distributions of $3 million to Series B preferred unitholders and $2 million to Series C preferred unitholders.

As of March 31, 2023, DCP LP had 6,450,000 Series B preferred units outstanding with an aggregate liquidation preference of approximately $161 million, and 4,400,000 Series C preferred units outstanding with an aggregate liquidation preference of $110 million. The Series B and C preferred units are publicly traded on the New York Stock Exchange.

Common Units

As of March 31, 2023, DCP LP had approximately 209 million of common units outstanding, of which approximately 91 million were publicly held. In addition, Enbridge holds a 23.36% economic interest in the approximately 118 million common units held by DCP Midstream Class A Segment. During the three months ended March 31, 2023, DCP LP made cash distributions of $51 million to common unit holders other than Phillips 66.

DCP LP Public Common Unit Acquisition

On January 5, 2023, we entered into a definitive agreement with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries will merge with and into DCP LP, with DCP LP surviving as a Delaware limited partnership. Under the terms of the agreement, at the effective time of the merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and DCP Midstream GP, LP) issued and outstanding as of immediately prior to the effective time will be converted into the right to receive $41.75 per common unit in cash, without interest. The merger will increase our economic interest in DCP LP from 43.3% to 86.8%. The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions.

If the merger is successfully completed, we will pay approximately $3.8 billion in cash consideration, which we expect to fund through a combination of cash generated from operating activities, proceeds from the offering of the Notes and borrowings under the Term Loan Agreement. See Note 11—Debt, for additional information.

The transaction was unanimously approved by the board of the general partner of DCP LP, based on the unanimous approval and recommendation of its special committee comprised entirely of independent directors after evaluation of the transaction by the special committee in consultation with independent financial and legal advisors. Concurrently with the execution of the agreement, affiliates of Phillips 66, which together own greater than a majority of the outstanding DCP LP common units, delivered their consent to approve the transaction. As a result, DCP LP has not solicited and is not soliciting approval of the transaction by any other holders of DCP LP common units.

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Note 22—Phillips 66 Partners LP

On March 9, 2022, we completed a merger between us and Phillips 66 Partners. The merger resulted in the acquisition of all limited partnership interests in Phillips 66 Partners not already owned by us in exchange for 41.8 million shares of Phillips 66 common stock issued from treasury stock. Phillips 66 Partners common unitholders received 0.50 shares of Phillips 66 common stock for each outstanding Phillips 66 Partners common unit. Phillips 66 Partners’ perpetual convertible preferred units were converted into common units at a premium to the original issuance price prior to being exchanged for Phillips 66 common stock. The merger was accounted for as an equity transaction. Upon closing, Phillips 66 Partners became a wholly owned subsidiary of Phillips 66 and its common units are no longer publicly traded.

Note 23—Restructuring

In April 2022, we announced that we are progressing a multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure. For the three months ended March 31, 2023, we recorded restructuring costs totaling $35 million, primarily related to consulting fees. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Corporate segment.

In addition, in the first quarter of 2023, we recorded restructuring costs of $12 million associated with the integration of DCP Midstream Class A Segment primarily related to severance. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Midstream segment.

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Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, “the company,” “we,” “our,” “us” and “Phillips 66” are used in this report to refer to the businesses of Phillips 66 and its consolidated subsidiaries.

Management’s Discussion and Analysis is the company’s analysis of its financial performance, financial condition, and significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes included elsewhere in this report. It contains forward-looking statements including, without limitation, statements relating to the company’s plans, strategies, objectives, expectations and intentions that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking. The company does not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the company’s disclosures under the heading: “CAUTIONARY STATEMENT FOR THE PURPOSES OF THE ‘SAFE HARBOR’ PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.”

The terms “earnings” or “loss” as used in Management’s Discussion and Analysis refer to net income (loss) attributable to Phillips 66. The terms “results,” “before-tax income” or “before-tax loss” as used in Management’s Discussion and Analysis refer to income (loss) before income taxes.

EXECUTIVE OVERVIEW AND BUSINESS ENVIRONMENT

Phillips 66 is a diversified energy company with Midstream, Chemicals, Refining, and Marketing and Specialties (M&S) operating segments. At March 31, 2023, we had total assets of $77 billion. Our common stock trades on the New York Stock Exchange under the symbol PSX.

Executive Overview

In the first quarter of 2023, we reported earnings of $2 billion and generated cash from operating activities of $1.2 billion. In addition, we had net borrowings of $1.3 billion. We used available cash to repurchase $800 million of common stock, pay dividends on our common stock of $486 million, and fund capital expenditures and investments of $378 million. We ended the first quarter of 2023 with $7 billion of cash and cash equivalents.

Business Transformation

We continue to progress our multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure. In 2022, we started implementing initiatives designed to achieve a targeted sustainable run-rate cost reduction of at least $800 million and lower sustaining capital of at least $200 million per year by the end of 2023.

Midstream NGL Merger Transactions

As part of executing our NGL growth strategy to build a wellhead-to-market value chain, on August 17, 2022, we announced a realignment of our economic and governance interests in DCP Midstream, LP (DCP LP) and Gray Oak Pipeline, LLC (Gray Oak Pipeline) resulting from the merger of DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings). In connection with the merger, we were delegated DCP Midstream’s governance rights over DCP LP and its general partner entities, referred to as DCP Midstream Class A Segment, and acquired an economic interest in DCP LP of 43.3%. As a result of the governance rights granted to us, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills) from the merger date forward.

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To further advance our NGL growth strategy on January 5, 2023, we entered into a definitive agreement with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries will merge with and into DCP LP, with DCP LP surviving as a Delaware limited partnership. Under the terms of the agreement, at the effective time of the merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and DCP Midstream GP, LP) issued and outstanding as of immediately prior to the effective time will be converted into the right to receive $41.75 per common unit in cash, without interest. The merger will increase our economic interest in DCP LP from 43.3% to 86.8%. The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions.

Since August 17, 2022, we also have been taking steps to integrate the operations of DCP Midstream Class A Segment to enable the capture of commercial and operational synergies. On April 1, 2023, we achieved a significant integration milestone with the transition of DCP Midstream’s employees to Phillips 66.

See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger, in the Notes to Consolidated Financial Statements, for additional information on the merger of DCP Midstream and Gray Oak Holdings and Note 21—DCP Midstream Class A Segment, in the Notes to Consolidated Financial Statements, for additional information on the common unit acquisition.

Business Environment

The Midstream segment includes our Transportation and NGL businesses. Our Transportation business contains fee-based operations not directly exposed to commodity price risk. Our NGL business, including DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills from August 18, 2022, forward, contains both fee-based operations and operations directly impacted by natural gas liquids (NGL), natural gas and condensate prices. During the first quarter of 2023, NGL and natural gas prices decreased, compared with the first quarter of 2022, due to warmer than usual weather, which negatively impacted heating demand.

The Chemicals segment consists of our 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The chemicals and plastics industry is mainly a commodity-based industry where the margins for key products are based on supply and demand, as well as cost factors. During the first quarter of 2023, the benchmark high-density polyethylene chain margin decreased, compared with the first quarter of 2022, mainly due to excess polyethylene capacity and weaker demand.

Our Refining segment results are driven by several factors, including market crack spreads, refinery throughput, feedstock costs, product yields, turnaround activity, and other operating costs. The price of U.S. benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, decreased to an average of $76.11 per barrel during the first quarter of 2023, compared with an average of $94.49 per barrel in the first quarter of 2022. Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil. Worldwide market crack spreads increased to an average of $30.59 per barrel during the first quarter of 2023, compared with an average of $21.93 per barrel in the first quarter of 2022. The increases in market crack spreads were primarily driven by improved demand for refined petroleum products, low refined product inventories and reduced crude oil prices.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined petroleum products. While marketing fuel and lubricant margins are primarily driven by market factors, largely determined by the relationship between supply and demand, marketing fuel margins, in particular, are influenced by trends in spot prices, and where applicable, retail prices for refined petroleum products in the regions and countries where we operate.

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RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three months ended March 31, 2023, is based on a comparison with the corresponding period of 2022.

Basis of Presentation

Effective August 18, 2022, forward, in connection with the merger of DCP Midstream and Gray Oak Holdings we began consolidating the results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. As a result of this transaction, we began presenting the results of DCP Midstream Class A Segment within the results of our NGL and Other business. Prior periods also have been updated to reflect the results of our equity investment in DCP Midstream prior to August 18, 2022, within the results of our NGL and Other business. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger, Note 4—Business Combinations, and Note 15—Fair Value Measurements, in the Notes to Consolidated Financial Statements, for additional information on the merger of DCP Midstream and Gray Oak Holdings.

Effective October 1, 2022, we changed the organizational structure of the internal financial information reviewed by our President and Chief Executive Officer, and determined this resulted in a change in the composition of our operating segments. As part of the realignment, we moved the results and net assets of our Merey Sweeny vacuum distillation and delayed coker units at our Sweeny Refinery and the isomerization unit at our Lake Charles Refinery from our Midstream segment to our Refining segment. Additionally, commissions charged to the Refining segment by the M&S segment related to sales of specialty products were eliminated and the costs of the sales organization were reclassified from the M&S segment to the Refining segment. Further, we are no longer presenting disaggregated business line results for our Chemicals and M&S segments to align with changes in our internal financial reporting. The segment realignment and business line reporting changes are presented for the three months ended March 31, 2023, with the prior periods recast for comparability.

Consolidated Results

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

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Midstream	$	702	212
Chemicals	198		396
Refining	1,608		173
Marketing and Specialties	426		296
Corporate and Other	(283)		(249)
Income before income taxes	2,651		828
Income tax expense	574		171
Net income	2,077		657
Less: net income attributable to noncontrolling interests	116		75
Net income attributable to Phillips 66	$	1,961	582

Our net income attributable to Phillips 66 in the first quarter of 2023 was $2 billion, compared with $582 million in the first quarter of 2022. The increase in net income attributable to Phillips 66 was primarily due to improved realized refining margins, partially offset by higher income tax expense.

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See the “Segment Results” section for additional information on our segment performance and Note 20—Income Taxes, in the Notes to Consolidated Financial Statements, for additional information on income taxes.

Statement of Income Analysis

Sales and other operating revenues for the first quarter of 2023 decreased 5%, and purchased crude oil and products decreased 12%. These decreases were mainly due to lower prices for refined petroleum products, crude oil and NGL.

Equity in earnings of affiliates decreased 11% in the first quarter of 2023. The decrease was primarily due to lower equity earnings from CPChem due to lower margins, as well as DCP Midstream, DCP Sand Hills, DCP Southern Hills and Gray Oak Pipeline due to the merger of DCP Midstream and Gray Oak Holdings in August 2022. Decreases in equity earnings from the above entities were partially offset by higher equity earnings from WRB Refining LP (WRB) due to improved realized refining margins. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and the Chemicals segment analysis in the “Segment Results” section for additional information regarding CPChem.

Net gain on dispositions increased $33 million in the first quarter of 2023. The increase was primarily due to a before-tax gain of $36 million recognized in the first quarter of 2023 associated with the sale of the Belle Chasse Terminal.

We had other income of $48 million in the first quarter of 2023, compared with other loss of $143 million in the first quarter of 2022. The improvement was primarily driven by an unrealized loss on our investment in NOVONIX of $12 million in the first quarter of 2023, compared with an unrealized loss of $158 million in the first quarter of 2022, as well as higher interest income. See Note 8—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements, for additional information regarding our investment in NOVONIX.

Operating expenses increased 18% first quarter of 2023. The increase was primarily due to consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills starting in August 2022, as well as higher turnaround and other maintenance expenses, partially offset by lower operating costs due to the sale of the Belle Chasse Terminal and lower employee-related costs.

Selling, general and administrative expenses increased 40% in the first quarter of 2023. The increase was primarily due to consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills starting in August 2022, as well as restructuring costs associated with our business transformation.

Depreciation and amortization increased 41% in the first quarter of 2023. The increase was 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 39% in the first quarter of 2023. The increase was primarily due to consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills starting in August 2022 and higher crude oil and refined petroleum product excise taxes.

Interest and debt expense increased 42% in the first quarter of 2023. The increase was primarily driven by higher average debt principal balances as a result of consolidating DCP Midstream Class A Segment, DCP Southern Hills and DCP Sand Hills starting in August 2022.

We had income tax expense of $574 million in the first quarter of 2023, compared with an income tax expense of $171 million in the first quarter of 2022. The fluctuation in income taxes between periods is primarily due to improved results. See Note 20—Income Taxes, in the Notes to Consolidated Financial Statements, for information regarding our effective income tax rates.

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Net income attributable to noncontrolling interests increased 55% in the first quarter of 2023. The increase was primarily driven by consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills starting in August 2022. This merger resulted in us reflecting additional noncontrolling interests on our consolidated income statement for the interests in DCP LP owned by public common and preferred unitholders and the interest in DCP Midstream Class A Segment held by Enbridge Inc. The increase from the merger above was partially offset by a decrease due to the merger between us and Phillips 66 Partners that occurred in the first quarter of 2022. Upon closing of this merger transaction, Phillips 66 Partners became a wholly owned subsidiary of Phillips 66. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and Note 22—Phillips 66 Partners LP, in the Notes to Consolidated Financial Statements, for additional information on these merger transactions.

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Segment Results

Midstream

	Three Months Ended March 31
	2023		2022
	Millions of Dollars
Income (Loss) Before Income Taxes
Transportation	$	306	278
NGL and Other	408		92
NOVONIX	(12)		(158)
Total Midstream	$	702	212

	Thousands of Barrels Daily
Transportation Volumes
Pipelines*	3,039	3,099
Terminals	3,203	2,900
Operating Statistics
NGL fractionated**	660	452
NGL production***	421	400

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

** Includes 100% of DCP Midstream Class A Segment’s volumes from August 18, 2022, forward.

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

	Dollars Per Gallon
Market Indicator
Weighted-Average NGL Price*	$	0.74	1.10
* Based on index prices from the Mont Belvieu market hub, which are weighted by NGL component mix.

The Midstream segment provides crude oil and refined petroleum product transportation, terminaling and processing services; NGL production, transportation, storage, fractionation, processing and marketing services; natural gas gathering, compressing, treating, processing, storage, transportation and marketing services; and condensate recovery. These activities are mainly in the United States. This segment also includes our investment in NOVONIX.

In connection with the merger of DCP Midstream and Gray Oak Holdings, 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 and Other 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. As a result of the merger and consolidation, equity earnings from our investment in DCP Midstream prior to the merger have been included with the results of our NGL and Other business.

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Results from our Midstream segment increased $490 million in the first quarter of 2023.

Results from our Transportation business increased $28 million in the first quarter of 2023. The increase was primarily due to a gain of $36 million from the sale of the Belle Chasse Terminal. Excluding the gain on sale, results were down slightly as lower equity earnings driven by a decrease in our indirect economic interest in Gray Oak Pipeline in connection with the merger of DCP Midstream and Gray Oak Holdings were mostly offset by the impact of higher volumes and lower operating costs.

Results from our NGL and Other business increased $316 million in the first quarter of 2023. The increase was primarily due to the consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills from August 18, 2022 forward, improved hedging results for DCP Midstream’s Class A Segment, as well as higher Sweeny Hub and trading results.

The fair value of our investment in NOVONIX decreased by $12 million in the first quarter of 2023, compared with a decrease of $158 million in the first quarter of 2022.

In the Notes to Consolidated Financial Statements, see Note 8—Investments, Loans and Long-Term Receivables, for additional information on our investment in NOVONIX.

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

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Chemicals

	Three Months Ended March 31
	2023		2022
	Millions of Dollars
Income Before Income Taxes	$	198	396

	Millions of Pounds
CPChem Externally Marketed Sales Volumes*	5,706	6,239
* Represents 100% of CPChem’s outside sales of produced petrochemical products, as well as commission sales from equity affiliates.

Olefins and Polyolefins Capacity Utilization (percent) 94  % 99 

The Chemicals segment consists of our 50% interest in CPChem, which we account for under the equity method. CPChem uses NGL and other feedstocks to produce petrochemicals. These products are then marketed and sold or used as feedstocks to produce plastics and other chemicals. CPChem produces and markets ethylene and other olefin products. Ethylene produced is primarily consumed within CPChem for the production of polyethylene, normal alpha olefins and polyethylene pipe. CPChem manufactures and markets aromatics and styrenics products, such as benzene, cyclohexane, styrene and polystyrene, as well as manufactures and/or markets a variety of specialty chemical products. Unless otherwise noted, amounts referenced below reflect our net 50% interest in CPChem.

Results from the Chemicals segment decreased $198 million in the first quarter of 2023. The decrease was primarily due to lower margins driven by a decline in sales prices due to higher market supply.

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

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Refining

	Three Months Ended March 31
	2023		2022
	Millions of Dollars
Income (Loss) Before Income Taxes
Atlantic Basin/Europe	$	142	152
Gulf Coast	705		41
Central Corridor	739		(135)
West Coast	22		115
Worldwide	$	1,608	173

	Dollars Per Barrel
Income (Loss) Before Income Taxes
Atlantic Basin/Europe	$	3.60	3.17
Gulf Coast	13.73		0.79
Central Corridor	28.42		(5.70)
West Coast	0.77		3.98
Worldwide	11.07		1.13
Realized Refining Margins*
Atlantic Basin/Europe	$	16.13	11.71
Gulf Coast	21.28		8.59
Central Corridor	26.86		7.89
West Coast	16.53		17.74
Worldwide	20.72		10.83

* 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.

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	Thousands of Barrels Daily
	Three Months Ended March 31
Operating Statistics	2023		2022
Refining operations*
Atlantic Basin/Europe
Crude oil capacity	537		537
Crude oil processed	443		503
Capacity utilization (percent)	82	%	94
Refinery production	438		538
Gulf Coast
Crude oil capacity	529		529
Crude oil processed	519		497
Capacity utilization (percent)	98	%	94
Refinery production	580		590
Central Corridor
Crude oil capacity	531		531
Crude oil processed	475		453
Capacity utilization (percent)	89	%	85
Refinery production	494		474
West Coast
Crude oil capacity	319		364
Crude oil processed	281		294
Capacity utilization (percent)	88	%	81
Refinery production	314		321
Worldwide
Crude oil capacity	1,916		1,961
Crude oil processed	1,718		1,747
Capacity utilization (percent)	90	%	89
Refinery production	1,826		1,923
* Includes our share of equity affiliates.

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

Results from our Refining segment increased $1,435 million in the first quarter of 2023, primarily due to higher realized refining margins driven by improved clean product differentials and market crack spreads, partially offset by lower volumes.

Our worldwide refining crude oil capacity utilization rate was 90% in the first quarter of 2023, compared with 89% in the first quarter of 2022. See the “Executive Overview and Business Environment” section for information on market factors impacting this quarter’s results.

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Marketing and Specialties

	Three Months Ended March 31
	2023		2022
	Millions of Dollars
Income Before Income Taxes	$	426	296

	Dollars Per Barrel
Income Before Income Taxes
U.S.	$	1.79	1.13
International	4.93		0.92
Realized Marketing Fuel Margins*
U.S.	$	2.30	1.59
International	6.45		2.30

* See the “Non-GAAP Reconciliations” section for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure, income before income taxes per barrel.

	Dollars Per Gallon
U.S. Average Wholesale Prices*
Gasoline	$	2.81	3.05
Distillates	3.23		3.25
* On third-party branded petroleum product sales, excluding excise taxes.

	Thousands of Barrels Daily
Marketing Refined Petroleum Product Sales
Gasoline	1,111	1,129
Distillates	848	1,011
Other	19	17
	1,978	2,157

The M&S segment purchases for resale and markets refined petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

Before-tax income from the M&S segment increased $130 million in the first quarter of 2023, primarily driven by higher realized marketing fuel margins, partially offset by lower results from trading activities.

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

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Corporate and Other

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Loss Before Income Taxes
Net interest expense	$	(124)	(132)
Corporate overhead and other	(159)		(117)
Total Corporate and Other	$	(283)	(249)

Net interest expense consists of interest and financing expense, net of interest income and capitalized interest. Corporate overhead and other includes general and administrative expenses, technology costs, environmental costs associated with sites no longer in operation, restructuring costs related to our business transformation, foreign currency transaction gains and losses, and other costs not directly associated with an operating segment.

Net interest expense decreased $8 million, in the first quarter of 2023. The decrease was primarily driven by increased interest income, partially offset by higher interest expense as a result of consolidating DCP Midstream Class A Segment.

Corporate overhead and other costs increased $42 million in the first quarter of 2023. The increase was primarily due to restructuring costs associated with our business transformation, mainly related to consulting fees. See Note 23—Restructuring, in the Notes to Consolidated Financial Statements, for additional information regarding restructuring costs.

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CAPITAL RESOURCES AND LIQUIDITY

Financial Indicators

	Millions of Dollars, Except as Indicated
	March 31 2023		December 31 2022
Cash and cash equivalents	$	6,965	6,133
Short-term debt	825		529
Total debt	18,485		17,190
Total equity	34,916		34,106
Percent of total debt to capital*	35%		34
Percent of floating-rate debt to total debt	3%		—
* Capital includes total debt and total equity.

To meet our short- and long-term liquidity requirements, we use a variety of funding sources but rely primarily on cash generated from operating activities and debt financing. During the first three months of 2023, we generated $1.2 billion of cash from operations and had net borrowings of $1.3 billion. We used available cash primarily to repurchase $800 million of our common stock, pay dividends on our common stock of $486 million, and fund capital expenditures and investments of $378 million. During the first three months of 2023, cash and cash equivalents increased $832 million to $7 billion.

Significant Sources of Capital

Operating Activities

During the first three months of 2023, cash generated by operating activities was $1.2 billion, compared with $1.1 billion for the first three months of 2022. The increase was primarily due to improved earnings, partially offset by unfavorable working capital impacts and decreased distributions from equity affiliates.

Our short- and long-term operating cash flows are highly dependent upon refining and marketing margins, NGL prices and chemicals margins. Prices and margins in our industry can be volatile, and are driven by market conditions over which we have little or no control. Absent other mitigating factors, as these prices and margins fluctuate, we would expect a corresponding change in our operating cash flows.

The level and quality of output from our refineries also impact our cash flows. Factors such as operating efficiency, maintenance turnarounds, market conditions, feedstock availability, and weather conditions can affect output. We actively manage the operations of our refineries, and any variability in their operations typically has not been as significant to cash flows as that caused by margins and prices.

Equity Affiliate Operating Distributions

Our operating cash flows are also impacted by distribution decisions made by our equity affiliates, including CPChem. During the first three months of 2023, cash from operations included aggregate distributions of $369 million from our equity affiliates. During the same period of 2022, cash from operations included aggregate distributions of $585 million, including $299 million from CPChem. We cannot control the amount of future dividends from equity affiliates; therefore, future dividend payments by these equity affiliates are not assured.

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Senior Note Issuances

On March 29, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.25 billion aggregate principal amount of senior unsecured notes consisting of:

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

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

The 2027 Notes and 2033 Notes (collectively, the Notes) are fully and unconditionally guaranteed by Phillips 66. Interest on the 2027 Notes is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2023. Interest on the 2033 Notes is payable semi-annually on June 30 and December 30 of each year, commencing on December 30, 2023.

The Notes are required to be redeemed at a price equal to 101% of the principal amount, plus accrued and unpaid interest, at the earliest occurrence of any of the following events: the DCP LP public common unit acquisition is not completed on or prior to December 31, 2023; the agreement to acquire the DCP LP public common units is terminated; or we notify the trustee of the notes in writing that the DCP LP public common unit acquisition will not be consummated on or prior to December 31, 2023. See Note 21—DCP Midstream Class A Segment, for additional information regarding the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

Term Loan Agreement

On March 27, 2023 (the Closing Date), Phillips 66 Company, a wholly owned subsidiary of Phillips 66, entered into a $1.5 billion delayed draw term loan agreement guaranteed by Phillips 66 (the Term Loan Agreement). The Term Loan Agreement provides for a single borrowing (the date of such borrowing, the Funding Date) during a 90-day period commencing on the Closing Date, contingent upon us completing the DCP LP public common unit acquisition, and matures on the third anniversary of the Funding Date. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement will bear interest at either: (a) Adjusted Term SOFR in effect from time to time plus the applicable margin; or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement. As of March 31, 2023, no borrowings are outstanding under the Term Loan Agreement. See Note 21—DCP Midstream Class A Segment, for additional information regarding the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On June 23, 2022, we entered into a $5 billion revolving credit facility with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. At both March 31, 2023, and December 31, 2022, no amount had been drawn under the $5 billion revolving credit facility or $5 billion uncommitted commercial paper program.

DCP Midstream Class A Segment

At March 31, 2023, DCP LP had $225 million of borrowings outstanding under its $1.4 billion credit facility and $2 million of letters of credit had been issued that supported the credit facility. At December 31, 2022, DCP LP had no borrowings outstanding under its $1.4 billion credit facility, and $10 million in letters of credit had been issued that are supported by the credit facility.

As of March 31, 2023, and December 31, 2022, $350 million and $40 million of borrowings, respectively, were outstanding under DCP LP’s accounts receivable securitization facility, which are secured by its accounts receivable at DCP Receivables LLC.

Total Committed Capacity Available

At March 31, 2023, and December 31, 2022, we had approximately $6.2 billion and $6.7 billion, respectively, of total committed capacity available under the credit facilities described above.

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Off-Balance Sheet Arrangements

Lease Residual Value Guarantees

Under the operating lease agreement for our headquarters facility in Houston, Texas, we have the option, at the end of the lease term in September 2025, to request to renew the lease, purchase the facility or assist the lessor in marketing it for resale. We have a residual value guarantee associated with the operating lease agreement with a maximum potential future exposure of $514 million at March 31, 2023. We also have residual value guarantees associated with railcar, truck and airplane leases with maximum potential future exposures totaling $164 million. These leases have remaining terms of five to ten years.

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

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 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 Court) denied Dakota Access’ writ of certiorari requesting the Court to review the lower court’s decision to order the EIS and vacate the easement. Therefore, the requirement to prepare the EIS stands. 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 of 2022, and release is expected in the second quarter of 2023.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access in March 2019. On April 1, 2022, Dakota Access’ wholly owned subsidiary repaid $650 million aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25% share, or $163 million, with a capital contribution of $89 million in March 2022 and $74 million of distributions we elected not to receive from Dakota Access in the first quarter of 2022. At March 31, 2023, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $1.85 billion.

In conjunction with the notes offering, Phillips 66 Partners, now a wholly owned subsidiary of Phillips 66, and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU). Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation. At March 31, 2023, our 25% share of the maximum potential equity contributions under the CECU was approximately $467 million.

If the pipeline is required to cease operations, and should Dakota Access and ETCO not have sufficient funds to pay ongoing expenses, we could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $20 million annually, in addition to the potential obligations under the CECU at March 31, 2023.

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

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Capital Requirements

Capital Expenditures and Investments

For information about our capital expenditures and investments, see the “Capital Spending” section below.

Debt Financing

Our debt balance at March 31, 2023, and December 31, 2022, was $18.5 billion and $17.2 billion, respectively. Our total debt-to-capital ratio was 35% and 34% at March 31, 2023, and December 31, 2022, respectively.

On March 15, 2023, DCP LP repaid its 3.875% senior unsecured notes due March 2023 with an aggregate principal amount of $500 million using borrowings under its revolving credit and accounts receivable securitization facilities.

On April 19, 2023, DCP LP announced its intent to redeem its 5.850% junior subordinated notes due May 2043 with an aggregate principal amount outstanding of $550 million on or about May 21, 2023. DCP LP expects to use borrowings under its revolving credit and accounts receivable securitization facilities.

DCP LP Public Common Unit Acquisition

On January 5, 2023, we entered into a definitive agreement with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries will merge with and into DCP LP, with DCP LP surviving as a Delaware limited partnership. Under the terms of the agreement, at the effective time of the merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and DCP Midstream GP, LP) issued and outstanding as of immediately prior to the effective time will be converted into the right to receive $41.75 per common unit in cash, without interest. The merger will increase our economic interest in DCP LP from 43.3% to 86.8%. The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions.

If the merger is successfully completed, we will pay approximately $3.8 billion in cash consideration, which we expect to fund through a combination of cash generated from operating activities, proceeds from the offering of the Notes and borrowings under the Term Loan Agreement.

The transaction was unanimously approved by the board of the general partner of DCP LP, based on the unanimous approval and recommendation of its special committee comprised entirely of independent directors after evaluation of the transaction by the special committee in consultation with independent financial and legal advisors. Concurrently with the execution of the agreement, affiliates of Phillips 66, which together own greater than a majority of the outstanding DCP LP common units, delivered their consent to approve the transaction. As a result, DCP LP has not solicited and is not soliciting approval of the transaction by any other holders of DCP LP common units.

See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and Note 21—DCP Midstream Class A Segment, in the Notes to the Consolidated Financial Statements, for additional information on the merger of DCP Midstream and Gray Oak Holdings.

DCP LP Cash Distributions to Unitholders

DCP LP’s partnership agreement requires that, within 45 days after the end of each quarter, DCP LP distributes all available cash. During the first quarter of 2023, DCP LP made cash distributions of $51 million to common unitholders other than Phillips 66, $3 million to Series B preferred unitholders and $2 million to Series C preferred unitholders. See Note 21—DCP Midstream Class A Segment, in the Notes to the Consolidated Financial Statements, for additional information.

On April 19, 2023, the board of directors of DCP Midstream GP, LLC, declared a quarterly distribution on DCP LP’s common units of $0.43 per common unit and a quarterly distribution on DCP LP’s Series B and Series C Preferred Units of $0.4922 and $0.4969 per unit, respectively. The distribution on the common units will be paid on May 15, 2023, to unitholders of record on May 1, 2023. The Series B distribution will be paid on June 15, 2023, to unitholders of record on June 1, 2023. The Series C distribution will be paid on July 17, 2023, to unitholders of record on July 3, 2023.

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Pending Acquisition

On April 10, 2023, we entered into an agreement to acquire certain marketing assets on the U.S. West Coast for cash consideration of approximately $260 million plus an adjustment for net working capital that will be determined at closing. The transaction is expected to close in the second or early third quarter of 2023, subject to regulatory approval and completion of other customary closing conditions.

Dividends

On February 8, 2023, our Board of Directors declared a quarterly cash dividend of $1.05 per common share, representing an 8% increase from the prior quarter. The dividend was paid on March 1, 2023, to holders of record at the close of business on February 21, 2023.

Share Repurchases

Since July 2012, our board of directors has authorized an aggregate of $20 billion of repurchases of our outstanding common stock. The authorizations do not have expiration dates. Future share repurchases are expected to be funded primarily through available cash. We are not obligated to repurchase any shares of common stock pursuant to these authorizations and may commence, suspend or terminate repurchases at any time. For the three months ended March 31, 2023, we repurchased 7.9 million shares at an aggregate cost of approximately $807 million. Since the inception of our share repurchase program in 2012, we have repurchased 183.8 million shares at an aggregate cost of $14.8 billion. Shares of stock repurchased are held as treasury shares.

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Capital Spending

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Capital Expenditures and Investments
Midstream*	$	124	163
Chemicals	—		—
Refining	227		172
Marketing and Specialties	11		11
Corporate and Other	16		24
Total Capital Expenditures and Investments	$	378	370
Selected Equity Affiliates**
CPChem	142		113
WRB	45		42
	$	187	155
* Includes 100% of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills capital expenditures and investments from August 18, 2022, forward, net of acquired cash.
** Our share of joint ventures’ capital spending.

Midstream

During the first three months of 2023, capital spending in our Midstream segment, including DCP LP, was primarily driven by expansion of gathering systems in the DJ Basin and Permian Basin, other return projects, as well as reliability and maintenance projects.

Chemicals

During the first three months of 2023, on a 100% basis, CPChem’s capital expenditures and investments were $283 million. The capital spending was primarily for the development of petrochemical projects on the U.S. Gulf Coast and in the Middle East, as well as sustaining, debottlenecking and optimization projects on existing assets. CPChem’s capital program was self-funded, and we expect CPChem to continue self-funding its capital program for the remainder of 2023.

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Refining

Capital spending for the Refining segment during the first three months of 2023 was primarily for refinery upgrade projects to enhance the yield of high-value products, produce renewable diesel, improve operating integrity of key processing units, and safety-related projects.

Major capital activities included:

•Installation of facilities to improve product value at the Lake Charles refinery.

•Engineering of facilities, procurement of long-lead items and construction to produce biofuels at the San Francisco refinery.

•Installation of facilities to improve product value at the jointly owned Borger refinery.

Marketing and Specialties

Capital spending for the M&S segment during the first three months of 2023 was primarily for the continued development and enhancement of retail sites in Europe.

Corporate and Other

Capital spending for Corporate and Other during the first three months of 2023 was primarily for information technology.

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Contingencies

A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal, or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Legal and Tax Matters

Our legal and tax matters are handled by our legal and tax organizations. These organizations apply their knowledge, experience and professional judgment to the specific characteristics of our cases and uncertain tax positions. We employ a litigation management process to manage and monitor the legal proceedings. Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required. In the case of income tax-related contingencies, we monitor tax legislation and court decisions, the status of tax audits and the statute of limitations within which a taxing authority can assert a liability.

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Environmental

Like other companies in our industry, we are subject to numerous international, federal, state and local environmental laws and regulations. For a discussion of the most significant international and federal environmental laws and regulations to which we are subject, see the “Environmental” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K.

We are required to purchase RINs in the open market to satisfy the portion of our obligation under the Renewable Fuel Standard (RFS) that is not fulfilled by blending renewable fuels into the motor fuels we produce. For the three months ended March 31, 2023 and 2022, we incurred expenses of $238 million and $152 million, respectively, associated with our obligation to purchase RINs in the open market to comply with the RFS for our wholly owned refineries. These expenses are included in the “Purchased crude oil and products” line item on our consolidated statement of income. Our jointly owned refineries also incurred expenses associated with the purchase of RINs in the open market, of which our share was $114 million and $85 million for the three months ended March 31, 2023 and 2022, respectively. These expenses are included in the “Equity in earnings of affiliates” line item on our consolidated statement of income. The amount of these expenses and fluctuations between periods is primarily driven by the market price of RINs, refinery production, blending activities and renewable volume obligation requirements.

We occasionally receive requests for information or notices of potential liability from the EPA and state environmental agencies alleging that we are a potentially responsible party under the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or an equivalent state statute. On occasion, we also have been made a party to cost recovery litigation by those agencies or by private parties. These requests, notices and lawsuits assert potential liability for remediation costs at various sites that typically are not owned by us, but allegedly contain wastes attributable to our past operations. At March 31, 2023 and December 31, 2022, we had been notified of potential liability under CERCLA and comparable state laws at 22 sites within the United States.

Notwithstanding any of the foregoing, and as with other companies engaged in similar businesses, environmental costs and liabilities are inherent concerns in certain of our operations and products, and there can be no assurance that those costs and liabilities will not be material. However, we currently do not expect any material adverse effect on our results of operations or financial position as a result of compliance with current environmental laws and regulations.

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Climate Change

There has been a broad range of proposed or promulgated state, national and international laws focusing on GHG emissions reduction, including various regulations proposed or issued by the EPA. These proposed or promulgated laws apply or could apply in states and/or countries where we have interests or may have interests in the future. Laws regulating GHG emissions continue to evolve, and while it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation, such laws potentially could have a material impact on our results of operations and financial condition as a result of increasing costs of compliance, lengthening project implementation and agency reviews, or reducing demand for certain hydrocarbon products. We continue to monitor legislative and regulatory actions and legal proceedings globally relating to GHG emissions for potential impacts on our operations.

For examples of legislation and regulation or precursors for possible regulation that do or could affect our operations, see the “Climate Change” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K.

We consider and take into account anticipated future GHG emissions in designing and developing major facilities and projects, and implement energy efficiency initiatives to reduce GHG emissions. Data on our GHG emissions, legal requirements regulating such emissions, and the possible physical effects of climate change on our coastal assets are incorporated into our planning, investment, and risk management decision-making. We are working to continuously improve operational and energy efficiency through resource and energy conservation throughout our operations.

In February 2022, we announced our intention to reduce our Scope 1 and Scope 2 GHG emissions intensity related to our operations by 50% of 2019 levels by the year 2050. This new target builds upon our previously announced 2030 GHG emissions intensity targets to reduce Scope 1 and Scope 2 emissions from our operations by 30% and Scope 3 emissions from our energy products by 15% compared to 2019 levels.

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GUARANTOR FINANCIAL INFORMATION

We have various cross guarantees between Phillips 66 and its wholly owned subsidiary Phillips 66 Company (together, the Obligor Group) with respect to publicly held debt securities. Phillips 66 conducts substantially all of its operations through subsidiaries, including Phillips 66 Company, and those subsidiaries generate substantially all of its operating income and cash flow. Phillips 66 has fully and unconditionally guaranteed the payment obligations of Phillips 66 Company with respect to its publicly held debt securities. In addition, Phillips 66 Company has fully and unconditionally guaranteed the payment obligations of Phillips 66 with respect to its publicly held debt securities. All guarantees are full and unconditional. At March 31, 2023, $13.3 billion of senior unsecured notes outstanding has been guaranteed by the Obligor Group.

See the “Significant Sources of Capital” section for additional information regarding the Exchange Offers by Phillips 66 Company for existing senior notes of Phillips 66 Partners that settled in May 2022.

Summarized financial information of the Obligor Group is presented on a combined basis. Intercompany transactions among the members of the Obligor Group have been eliminated. The financial information of non-guarantor subsidiaries has been excluded from the summarized financial information. Significant intercompany transactions and receivable/payable balances between the Obligor Group and non-guarantor subsidiaries are presented separately in the summarized financial information.

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The summarized results of operations for the three months ended March 31, 2023, and the summarized financial position at March 31, 2023, and December 31, 2022, for the Obligor Group on a combined basis were:

Summarized Combined Statement of Income	Millions of Dollars
	Three Months Ended March 31, 2023
Sales and other operating revenues	$	24,824
Revenues and other income—non-guarantor subsidiaries	1,403
Purchased crude oil and products—third parties	14,695
Purchased crude oil and products—related parties	3,671
Purchased crude oil and products—non-guarantor subsidiaries	4,778
Income before income taxes	1,505
Net income	1,191

Summarized Combined Balance Sheet	Millions of Dollars
	March 31 2023		December 31 2022
Accounts and notes receivable—third parties	$	4,270	5,485
Accounts and notes receivable—related parties	1,094		1,376
Due from non-guarantor subsidiaries, current	936		741
Total current assets	15,952		15,566
Investments and long-term receivables	10,840		10,433
Net properties, plants and equipment	11,675		11,652
Goodwill	1,047		1,047
Due from non-guarantor subsidiaries, noncurrent	2,092		2,163
Other assets associated with non-guarantor subsidiaries	1,970		2,144
Total noncurrent assets	29,354		29,209
Total assets	45,306		44,775
Due to non-guarantor subsidiaries, current	$	2,284	2,297
Total current liabilities	11,001		11,148
Long-term debt	12,494		12,060
Due to non-guarantor subsidiaries, noncurrent	7,318		7,088
Total noncurrent liabilities	25,994		25,223
Total liabilities	36,995		36,371
Total equity	8,311		8,404
Total liabilities and equity	45,306		44,775

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NON-GAAP RECONCILIATIONS

Refining

Our realized refining margins measure the difference between (a) sales and other operating revenues derived from the sale of petroleum products manufactured at our refineries and (b) costs of feedstocks, primarily crude oil, used to produce the petroleum products. The realized refining margins are adjusted to include our proportional share of our joint venture refineries’ realized margins, as well as to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized refining margins are converted to a per-barrel basis by dividing them by total refinery processed inputs (primarily crude oil) measured on a barrel basis, including our share of inputs processed by our joint venture refineries. Our realized refining margin per barrel is intended to be comparable with industry refining margins, which are known as “crack spreads.” As discussed in “Executive Overview and Business Environment—Business Environment,” industry crack spreads measure the difference between market prices for refined petroleum products and crude oil. We believe realized refining margin per barrel calculated on a similar basis as industry crack spreads provides a useful measure of how well we performed relative to benchmark industry refining margins.

The GAAP performance measure most directly comparable to realized refining margin per barrel is the Refining segment’s “income (loss) before income taxes per barrel.” Realized refining margin per barrel excludes items that are typically included in a manufacturer’s gross margin, such as depreciation and operating expenses, and other items used to determine income (loss) before income taxes, such as general and administrative expenses. It also includes our proportional share of joint venture refineries’ realized refining margins and excludes special items. Because realized refining margin per barrel is calculated in this manner, and because realized refining margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool. Following are reconciliations of income (loss) before income taxes to realized refining margins:

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	Millions of Dollars, Except as Indicated
Realized Refining Margins	Atlantic Basin/ Europe		Gulf Coast	Central Corridor	West Coast	Worldwide
Three Months Ended March 31, 2023
Income before income taxes	$	142	705	739	22	1,608
Plus:
Taxes other than income taxes	22		33	25	33	113
Depreciation, amortization and impairments	50		60	38	54	202
Selling, general and administrative expenses	10		4	21	10	45
Operating expenses	365		286	166	350	1,167
Equity in (earnings) losses of affiliates	2		(1)	(200)	—	(199)
Other segment (income) expense, net	20		5	(1)	1	25
Proportional share of refining gross margins contributed by equity affiliates	26		—	402	—	428
Realized refining margins	$	637	1,092	1,190	470	3,389
Total processed inputs (thousands of barrels)	39,472		51,349	26,004	28,416	145,241
Adjusted total processed inputs (thousands of barrels)*	39,472		51,349	44,315	28,416	163,552
Income before income taxes per barrel (dollars per barrel)**	$	3.60	13.73	28.42	0.77	11.07
Realized refining margins (dollars per barrel)***	16.13		21.28	26.86	16.53	20.72
Three Months Ended March 31, 2022
Income (loss) before income taxes	$	152	41	(135)	115	173
Plus:
Taxes other than income taxes	19		27	18	24	88
Depreciation, amortization and impairments	52		56	35	60	203
Selling, general and administrative expenses	6		4	13	7	30
Operating expenses	296		317	184	306	1,103
Equity in losses of affiliates	3		2	16	—	21
Other segment (income) expense, net	12		—	(4)	1	9
Proportional share of refining gross margins contributed by equity affiliates	23		—	205	—	228
Realized refining margins	$	563	447	332	513	1,855
Total processed inputs (thousands of barrels)	48,015		52,151	23,691	28,877	152,734
Adjusted total processed inputs (thousands of barrels)*	48,015		52,151	42,267	28,877	171,310
Income (loss) before income taxes per barrel (dollars per barrel)**	$	3.17	0.79	(5.70)	3.98	1.13
Realized refining margins (dollars per barrel)***	11.71		8.59	7.89	17.74	10.83
* Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate.
** Income (loss) before income taxes divided by total processed inputs.
*** Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts.

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Marketing

Our realized marketing fuel margins measure the difference between (a) sales and other operating revenues derived from the sale of fuels in our M&S segment and (b) costs of those fuels. The realized marketing fuel margins are adjusted to exclude those items that are not representative of the underlying operating performance of a period, which we call “special items.” The realized marketing fuel margins are converted to a per-barrel basis by dividing them by sales volumes measured on a barrel basis. We believe realized marketing fuel margin per barrel demonstrates the value uplift our marketing operations provide by optimizing the placement and ultimate sale of our refineries’ fuel production.

Within the M&S segment, the GAAP performance measure most directly comparable to realized marketing fuel margin per barrel is the marketing business’ “income before income taxes per barrel.” Realized marketing fuel margin per barrel excludes items that are typically included in gross margin, such as depreciation and operating expenses, and other items used to determine income before income taxes, such as general and administrative expenses. Because realized marketing fuel margin per barrel excludes these items, and because realized marketing fuel margin per barrel may be defined differently by other companies in our industry, it has limitations as an analytical tool. Following are reconciliations of income before income taxes to realized marketing fuel margins:

	Millions of Dollars, Except as Indicated
	Three Months Ended March 31, 2023			Three Months Ended March 31, 2022
	U.S.		International	U.S.	International
Realized Marketing Fuel Margins
Income before income taxes	$	273	125	191	23
Plus:
Depreciation and amortization	3		18	3	18
Selling, general and administrative expenses	181		62	182	63
Equity in earnings of affiliates	(3)		(22)	(7)	(26)
Other operating revenues*	(108)		(13)	(107)	(12)
Other expense, net	5		6	6	4
Marketing margins	351		176	268	70
Less: margin for nonfuel related sales	—		12	—	13
Realized marketing fuel margins	$	351	164	268	57
Total fuel sales volumes (thousands of barrels)	152,662		25,380	169,196	24,926
Income before income taxes per barrel (dollars per barrel)	$	1.79	4.93	1.13	0.92
Realized marketing fuel margins (dollars per barrel)**	2.30		6.45	1.59	2.30
* Includes other nonfuel revenues.
** Realized marketing fuel margins per barrel, as presented, are calculated using the underlying realized marketing fuel margin amounts, in dollars, divided by sales volumes, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts.

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

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can normally identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions that convey the prospective nature of events or outcomes, but the absence of such words does not mean a statement is not forward-looking.

We based the forward-looking statements on our current expectations, estimates and projections about us, our operations, our joint ventures and entities in which we have equity interests, as well as the industries in which we and they operate. We caution you not to place undue reliance on these forward-looking statements as they are not guarantees of future performance and involve assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecast in any forward-looking statements. Such differences could result from a variety of factors, including:

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

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

•Capacity constraints in, or other limitations on, the pipelines, storage and fractionation facilities to which we deliver natural gas or NGL and the availability of alternative markets and arrangements for our natural gas and NGL.

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

•The ability to achieve the expected benefits of the integration of DCP LP and any other benefits that may result from the buy-in of DCP’s publicly-held common units, if consummated.

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

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

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

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

•The inability to timely obtain or maintain permits, including those necessary for capital projects.

•The inability to comply with government regulations or make capital expenditures required to maintain compliance.

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

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

•The impact on commercial activity and demand for refined petroleum products from any widespread public health crisis, as well as the extent and duration of recovery of economies and demand for our products following any such crisis.

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•Failure to complete definitive agreements and feasibility studies for, and to complete construction of, announced and future capital projects on time and within budget.

•Potential disruption or interruption of our operations or damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks.

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

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

•International monetary conditions and exchange controls.

•Substantial investments required, or reduced demand for products, as a result of existing or future environmental rules and regulations, including GHG emissions reductions and reduced consumer demand for refined petroleum products.

•Liability resulting from litigation or for remedial actions, including removal and reclamation obligations under environmental regulations.

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

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

•Changes in estimates or projections used to assess fair value of intangible assets, goodwill and property and equipment and/or strategic decisions or other developments with respect to our asset portfolio that cause impairment charges.

•Limited access to capital or significantly higher cost of capital related to changes to our credit profile or illiquidity or uncertainty in the domestic or international financial markets.

•The creditworthiness of our customers and the counterparties to our transactions, including the impact of bankruptcies.

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

•The factors generally described in Item 1A.—Risk Factors in our 2022 Annual Report on Form 10-K.

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Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our commodity price risk and interest rate risk at March 31, 2023, did not differ materially from the risks disclosed under Item 7A of our 2022 Annual Report on Form 10-K.

Item 4.   CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934, as amended (the Act), is recorded, processed, summarized and reported within the time periods specified in U.S. Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. As of March 31, 2023, with the participation of management, our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer carried out an evaluation, pursuant to Rule 13a-15(b) of the Act, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were operating effectively as of March 31, 2023.

There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) of the Act, in the quarterly period ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

From time to time, we may be involved in litigation and claims arising out of our operations in the normal course of business. Additionally, we have elected a $300,000 threshold to disclose certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings. During the first quarter of 2023, one such new matter arose and no material developments occurred with respect to matters previously reported but still unresolved. We do not currently believe that the eventual outcome of any matters previously reported but still unresolved, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Further, our U.S. refineries are implementing two separate consent decrees, regarding alleged violations of the Federal Clean Air Act, with the EPA, five states and one local air pollution agency. Some of the requirements and limitations contained in the decrees provide for stipulated penalties for violations. Stipulated penalties under the decrees are not automatic, but must be requested by one of the agency signatories. As part of periodic reports under the decrees or other reports required by permits or regulations, we occasionally report matters that could be subject to a request for stipulated penalties. If a specific request for stipulated penalties meeting the reporting threshold set forth in U.S. Securities and Exchange Commission (SEC) rules is made pursuant to these decrees based on a given reported exceedance, we will separately report that matter and the amount of the proposed penalty. We did receive such a request in the first quarter of 2023, which is described in the new matter below.

New Matter

Following preliminary discussions, we expect to receive a final demand for alleged stipulated penalties arising from self-reported Clean Air Act violations at our Alliance, Borger, Sweeny and Wood River refineries. The proposed penalties exceed $500,000 and would be pursued pursuant to the consent decree referenced above and a related Wood River Refinery consent decree.

See Note 13—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, for additional information.

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Item 1A.   RISK FACTORS

Except as set forth below, there have been no material changes from the risk factors disclosed in Item 1A of our 2022 Annual Report on Form 10-K.

Political and economic developments could affect our operations and materially reduce our profitability and cash flows.

Actions of federal, state, local and international governments through legislation or regulation, executive order, permit or other review of infrastructure or facility development, and commercial restrictions could delay projects, increase costs, limit development, or otherwise reduce our profitability both in the United States and abroad. Any such actions may affect many aspects of our operations, including:

•Establishing maximum margins that can be earned on sales of motor fuels or imposing financial penalties on profits earned above any established maximum margins.

•Limiting or prohibiting our ability to undertake turnaround or other maintenance activities at our refineries.

•Requiring permits or other approvals that may impose unforeseen or unduly burdensome conditions or potentially cause delays in our operations.

•Further limiting or prohibiting construction or other activities in environmentally sensitive or other areas.

•Requiring increased capital costs to construct, maintain or upgrade equipment, facilities or infrastructure.

•Restricting the locations where we may construct facilities or requiring the relocation of facilities.

For example, in March 2023, the California legislature adopted Senate Bill No. 2 (such statute, together with any regulations contemplated or issued thereunder, SBx 1-2), which, among other things, (i) authorizes the establishment of a maximum gross gasoline refining margin (maximum margin) and the imposition of a financial penalty for profits above the maximum margin, (ii) significantly expands reporting obligations relating to the maintenance and business of our California refineries, which includes reporting requirements to the California Energy Commission (CEC) for all participants in the petroleum industry supply chain in California, (iii) creates the Division of Petroleum Market Oversight within the CEC to analyze the data provided under SBx 1-2, and (iv) authorizes the CEC to regulate the timing and other aspects of refinery turnaround and other maintenance activities in certain instances. While the provisions of SBx 1-2 are expected to become effective June 26, 2023, and the CEC has not yet undertaken rulemaking with respect to SBx 1-2, the potential implementation of a financial penalty or any restrictions or delays on our ability to undertake turnaround or other maintenance activities creates uncertainty due to the potential adverse effects on our refining, marketing and midstream operations in California, which may be material to our results of operations, financial condition, profitability and cash flows.

We anticipate that other jurisdictions may contemplate similarly focused legislation or actions. The ultimate timing and impacts of SBx 1-2 and any other similarly focused legislation or actions are subject to considerable uncertainty due to a number of factors, including technological and economic feasibility, legal challenges, and potential changes in law, regulation, or policy, and it is not currently possible to predict the ultimate effects of these matters and developments, but they may be significant. For example, adverse effects on the financial performance of our operations in the state of California or the useful lives of the assets related to such operations may result in the recognition of material asset impairment charges and asset retirement obligations.

Furthermore, the U.S. government can prevent or restrict us from doing business in foreign countries and from doing business with entities affiliated with foreign governments, which can include state oil companies and U.S. subsidiaries of those companies. The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security matters. The effect of any such OFAC sanctions could disrupt transactions with or operations involving entities affiliated with sanctioned countries, and could limit our ability to obtain optimum crude slates and other refinery feedstocks and effectively distribute refined petroleum products.

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Other political and economic risks include global pandemics; financial market turmoil; economic volatility and global economic slowdown; currency exchange rate fluctuations; short-term and long-term inflationary pressures; import or export restrictions and changes in trade regulations; supply chain disruptions; acts of terrorism, war, civil unrest and other political risks; limitations in the availability of labor to develop, staff and manage operations; and potentially adverse tax developments. If any of these events occur, our businesses and results of operations may be adversely affected.

Item 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

					Millions of Dollars
Period	Total Number of Shares Purchased*	Average Price Paid per Share**		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs***	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2023	2,318,765	$	105.43	2,318,765	$	5,730
February 1-28, 2023	2,440,300	103.12		2,440,300	5,478
March 1-31, 2023	3,115,136	99.80		3,115,136	5,167
Total	7,874,201	$	102.48	7,874,201
* Includes repurchase of shares of common stock from company employees in connection with the company’s broad-based employee incentive plans, when applicable.
** Average price paid per share includes excise tax.
*** Since July 2012, our Board of Directors has authorized an aggregate of $20 billion of repurchases of our outstanding common stock. Repurchases pursuant to the current authorizations do not have an expiration date. The share repurchases are expected to be funded primarily through available cash. We are not obligated to repurchase any shares of common stock pursuant to these authorizations and may commence, suspend or terminate repurchases at any time. Shares of stock repurchased are held as treasury shares.

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Item 6. EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit Number	Filing Date	SEC File No.
4.1	Form of the terms of the 2027 Notes, including the form of the 2027 Note.	8-K	4.2	03/29/2023	001-35349
4.2	Form of the terms of the 2033 Notes, including the form of the 2033 Note.	8-K	4.3	03/29/2023	001-35349
10.1	Credit Agreement dated as of March 27, 2023, among Phillips 66 Company, Phillips 66, as guarantor, the lenders party thereto, and Mizuho Bank, Ltd., as administrative agent.	8-K	10.1	03/29/2023	001-35349
10.2*	Form of Stock Option Award Agreement under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.**
10.3*	Form of Restricted Stock or Restricted Stock Unit Award Agreement under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.**
10.4*	Form of Performance Share Unit Award Agreement under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.**
10.5*	Letter Agreement with Vanessa L. Allen Sutherland, dated October 9, 2021.**
22*	List of Guarantor Subsidiaries.
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32*	Certifications pursuant to 18 U.S.C. Section 1350.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Schema Document.
101.CAL*	Inline XBRL Calculation Linkbase Document.
101.LAB*	Inline XBRL Labels Linkbase Document.
101.PRE*	Inline XBRL Presentation Linkbase Document.
101.DEF*	Inline XBRL Definition Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Management contracts and compensatory plans or arrangements.

69

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PHILLIPS 66

/s/ J. Scott Pruitt

J. Scott Pruitt

Vice President and Controller

(Chief Accounting and Duly Authorized Officer)

Date: May 4, 2023

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EX-10.2

Exhibit 10.2

	PHILLIPS 66 Terms & Conditions For [*] Stock Option Program
Grant Date: Grant Price: Vesting Schedule:	[*] [*] One third on each anniversary date of grant in the first three years

This document applies to Awards made under the Stock Option Program (“Program”) provided under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 (“Plan”) or any successor to the Plan. The Program is designed to benefit the Company's shareholders by encouraging high levels of performance and alignment by Eligible Employees whose performance is a key element in achieving the Company's corporate strategies. Phillips 66 reserves the right to discontinue or change this Program at any time.

This document defines the general conditions, eligibility, and determination of Awards. It also addresses what happens in the event of employment termination, and how Awards are exercised and taxed.

All Award amounts and the terms and conditions of any Awards are within the discretion of the Committee.

•Nothing in this Program should be construed to limit the discretion of the Committee in determining the amount and terms and conditions of an Award, including the discretion to forego an Award for any Employee. The Authorized Party retains all discretion.

•All Awards shall comply with the required terms and conditions.

•No Award shall exceed any limit set forth in the Plan.

•If the Authorized Party, in its sole discretion, determines an Award has the possibility of violating any law, regulation, or decree pertaining to the Company or the Participating Employee, the Authorized Party may freeze or suspend the Participating Employee’s Award until the time as having the Award would no longer, in the sole discretion of the Authorized Party, have the possibility of violating any laws, regulation, or decree.

•This procedure will continue in effect until amended, rescinded, or terminated.

Capitalized terms shall have the meaning designated in this Program. Capitalized terms not defined in this Program shall have the meaning set forth in the Plan.

•Authorized Party means the person who is authorized to approve an Award, exercise discretion, or take action under the Program pursuant to the Plan. With regard to the Executive Chairman, CEO and Senior Officers, the Committee is the Authorized Party. With regard to other Employees, the CEO is the Authorized Party, although the Committee may act concurrently as the Authorized Party.

•Award means cash, stock option, performance share unit, restricted stock unit or any other form of equity or cash pursuant to the Program’s applicable terms, conditions and limitations as the Authorized Party may provide in order to fulfill the objectives of the Program.

•Award Agreement means any written or electronic agreement setting forth, or incorporating by reference, the terms, conditions, and limitations applicable to an Award to a Participating Employee. An Award Agreement may be unilaterally issued by the Company and need not be executed or countersigned by the Participating Employee.

•Board means the Board of Directors of Phillips 66.

•CEO means the Chief Executive Officer of Phillips 66. Where applicable, CEO also refers to the person holding that title but acting as a Special Equity Award Committee pursuant to the authority granted by the Board.

•Committee means the Human Resources and Compensation Committee of the Board of Directors of the Company, or any successor committee to it.

•Company means Phillips 66, a Delaware Corporation.

•Disability means a disability for which the Employee in question has been determined to be entitled to either, (i) benefits under the applicable long-term disability plan of the Participating Company or (ii) disability benefits under the Social Security Act. In the absence of any determination, the Authorized Party may make a determination that the Employee has a Disability.

•Eligible Employee shall include Employees that meet the participation requirements for this Program. Being an Eligible Employee does not guarantee an Award.

•Employee shall include employees of Phillips 66 and its subsidiaries, as designated in the records of the Company and its subsidiaries.

•Exchange Rate means the applicable currency Exchange Rate as published in the Phillips 66 and Consolidated Subsidiaries Corporate Booking Ratesfor the relevant date; or, if the appropriate country is not listed on that date, the applicable currency Exchange Rate as published on the last date prior to the relevant date.

•Fair Market Value means, as of a particular date, the mean between the highest and lowest sales price per share on the consolidated transaction reporting system for the principal national securities exchange on which shares are listed on that date rounded to 4 decimals, or, if there is no sale reported on that date, on the preceding date on which a sale is reported or, at the discretion of the Committee, the price prevailing on the exchange at a designated time.

•Grant Date means the date the Award is granted.

•Grant Price is a simplified way of describing “Fair Market Value as of Grant Date”. It is the price at which Employees may exercise their right to receive cash or shares under the terms of an Award.

•Layoff means an applicable Termination due to layoff under the Phillips 66 Severance Pay Plan, Phillips 66 Executive Severance Plan, or the Phillips 66 Key Employee Change in Control Severance Plan, or layoff or redundancy under any similar layoff or redundancy plan which the Participating Company may adopt from time to time. If all or any portion of the benefits under the redundancy or layoff plan are contingent on the Employee’s signing a Release of Liability or covenant not to compete or both, the Termination shall not be considered as a “Layoff” for purposes of the Program unless the Employee executes and does not revoke a Release of Liability, a covenant not to compete, or both, acceptable to the Company, under the terms of the layoff or redundancy plan.

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•Option Cost meansthe value of an option on one Share computed using a reasonable valuation methodology based upon the Black Scholes-Merton option pricing model. Option Cost is approved, prior to the annual compensation cycle, by the CFO. Additionally, for Stock Options grants made outside of the annual cycle, which are rare, an updated Option Cost is determined with updated variables, except for term. Term is only determined once per year.

•Participating Company includes Phillips 66 and its 100% owned subsidiaries, including both those directly owned and those owned through subsidiaries, whose participation has been approved by the Authorized Party.

•Participating Employee shall include Eligible Employee receiving an Award under this Program. Being a Participating Employee does not guarantee a distribution.

•Plan Administrator means the Phillips 66 employee internally responsible for the administration of Programs.

•Release of Liability is a form provided to an Employee upon Layoff. Unless the Participating Employee executes and does not revoke the Release of Liability, the Participating Employee forfeits all Awards.

•Retirement means Termination at age 55 or older with a minimum of 5 years of service with a Participating Company; provided, however, that with regard to an Employee not on the United States payroll, the Authorized Party may approve the use of a different definition. Service is defined by the policies of the Participating Company.

•Salary is expressed as an annual amount in USD, prior to any voluntary salary reduction. In cases where a Participating Employee’s Salary has been increased due to a local market factor (as the term is used in the Company’s compensation practice; for example, the London Allowance) the Salary shall be reduced by the effect of the factor. For Participating Employees paid in a currency other than U.S. Dollars, Salary will be expressed in USD using the applicable Exchange Rate as of the first of the month immediately preceding the Grant Date of the Award.

◦Salary for Awards made in any month other than February is determined as of the first of the month coincident with or immediately following Grant Date, or as otherwise determined by the Authorized Party.

◦Salary for Awards made in February is determined as of the last day of the preceding calendar year if the Employee was employed and an Eligible Employee in the preceding calendar year.

◦Salary for Awards made in February is determined as of the date of hire or promotion if the Employee was hired or promoted and is an Eligible Employee on or before February 1 in the year of the grant.

•Salary Grade means a classification level for Employees under the practices of the Participating Company.

◦Salary Grade for Awards made in any month other than February is determined as of the first of the month coincident with or immediately following Grant Date, or as otherwise determined by the Authorized Party.

◦Salary Grade for Awards made in February is determined as of the last day of the preceding calendar year if the Employee was employed and an Eligible Employee in the preceding calendar year.

◦Salary Grade for Awards made in February is determined as of the date of hire or promotion if the Employee was hired or promoted into a position and is an Eligible Employee on or before February 1 in the year of the grant.

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•Senior Officer means all officers of the Company who report directly to the CEO, and all other officers of the Company who are a Senior Vice President and above, or who are reporting officers under Section 16 of the Securities Exchange Act of 1934.

•Shares means shares of PSX common stock.

•SO Target Percentage means the percentage as approved in Appendix B.

•Stock Option means a right to purchase a specified number of Shares at a specified Grant Price pursuant to the applicable terms, conditions, and limitations established by the Authorized Party. Stock Options issued will be nonqualified, which means they can be issued to Employees or members of the Board.

•Termination means cessation of employment with the Participating Companies, determined in accordance with the policies and practices of the Participating Company for whom the Employee was last performing services.

•Termination Date is defined as the first date an Employee is no longer employed by and performing services for a Participating Company.

I. GENERAL CONDITIONS

1.The Committee, or to the extent authorized by the Committee, the CEO, or another designated individual or committee, shall have the right to terminate, suspend, withdraw, amend, or modify the Program in whole or in part at any time. The CEO shall review and approve this document and may amend it as necessary.

2.Awards are subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. Awards are also subject to forfeiture or recoupment in the event a Participating Employee’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit & Finance Committee of the Board. If the Authorized Party determines that, subsequent to the receipt of any Award, the Participating Employee has engaged or is engaging in any activity which, in the sole judgment of the Authorized Party, is or may be detrimental to the Participating Company, the Authorized Party may cancel all or part of any or all Awards to that Participating Employee.

3.Upon any change in the outstanding stock of the Company by reason of any stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other similar changes, the Committee shall make corresponding adjustments, as appropriate.

4.In addition to the terms and conditions described, Awards are subject to all other applicable provisions of the Plan. The decisions of the Committee with respect to questions arising as to the interpretation of the Plan or the Award Agreement and as to findings of fact shall be final, conclusive, and binding.

5.No provision of this document shall confer any right upon the Employee to continue employment with any Participating Company.

6.The Award Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.

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7.Without the consent of the Employee, the Award Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision which may be defective or inconsistent with any other provision, or (ii) to add to the covenants and agreements of the Company for the benefit of an Employee or to add to the rights of an Employee or to surrender any right or power reserved to or conferred upon the Company in the Award Agreement, provided, in each case, that such changes or corrections shall not adversely affect the rights of the Employee with respect to the grant of an Award evidenced without the Employee’s consent, or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities or tax laws.

II. DETERMINATION OF AWARD

The Award shall be held in escrow by the Company until the lapsing of restrictions placed upon the Stock Options. Generally, restrictions shall lapse and Stock Options become exercisable to the extent that one third of the Stock Options (rounded down to the nearest whole share) shall be exercisable on the first anniversary of the Grant Date. On the second anniversary date of the Grant Date, an additional one third of the Stock Options (rounded down to the nearest whole share) shall become exercisable. On the third anniversary date of the Grant Date, the remaining Stock Options shall become exercisable. Stock Options granted under this Procedure will be for a term of ten years. An Authorized Party may, however, designate another term, not in excess of ten years, with respect to any Award. Participating Employees shall not have the right to sell, transfer, assign, or otherwise dispose of Stock Options until the escrow is terminated.

III. EFFECT OF TERMINATION OF EMPLOYMENT

The following is meant to clarify what happens in the event of various Terminations for Participating Employees with Awards.

1.Death. If a Participating Employee dies while in the employ of a Participating Company, the Participating Employee’s rights to any Award will pass to the beneficiary on file with the third-party administrator, or in the absence of a designated beneficiary, to the executor or administrator of the estate of the Participating Employee. However, the Award will be subject to the terms and conditions that applied to the Participating Employee before their death. Rights cannot be assigned or transferred other than by will or the laws of descent and distribution. No transfer of an Award by the Participating Employee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the will and any other evidence as the Company may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of the Award. If a beneficiary designation conflicts with an assignment by will or under the laws of descent and distribution, the beneficiary designation will prevail.

2.Disability. If a Participating Employee terminates employment by reason of Disability and has Awards with restrictions, the Participating Employee shall retain all rights provided by the Award at the time of Termination.

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3.Layoff. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Layoff:

•If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff, and the Participating Employee completes the required Release of Liability, then the Participating Employee shall retain a prorated portion of the Award. The prorated portion of the Award shall vest and retain the original exercise schedule. The percent of the Award to be retained will be computed by multiplying the original number of Shares granted by a percentage as outlined in Attachment A for the annual Awards made in February. All other Awards will be prorated by a fraction, the numerator of which is the number of months from Grant Date to Termination Date and the denominator of which is 12. The calculation shall be rounded to the nearest whole share.

4.Retirement. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Retirement:

•If the Participating Employee’s employment with a Participating Company is terminated by reason of Retirement, then the Participating Employee shall retain a prorated portion of the Award. The percent of the Award to be retained will be computed by multiplying the original number of Shares granted by a percentage as outlined in Attachment A for the annual Awards made in February. All other Awards will be prorated by a fraction, the numerator of which is the number of months from Grant Date to Termination Date and the denominator of which is 12. The calculation shall be rounded to the nearest whole share.

5.If the Participating Employee Terminates for any reason other than death, Disability, Layoff, or Retirement, the vested and unvested portion of the Award shall be canceled and all rights thereunder shall cease; however, the Authorized Party may, in its sole discretion, determine that all or any portion of the Award shall not be cancelled due to Termination.

6.Leaves. Whether any leave of absence shall constitute Termination for the purposes of any Award granted under these Programs shall be determined by the Plan Administrator in each case in accordance with applicable law and by application of the policies and procedures adopted by the Company in relation to such leave of absence.

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7.Divestiture, Outsourcing or Move to Joint Venture. If, after the date the Award is granted, a Participating Employee ceases to be employed by a Participating Company as a result of (a) the outsourcing of a function, (b) the sale or transfer of all or a portion of the equity interest of the Participating Company (removing it from the controlled group of companies of which the Company is a part), (c) the sale of all or substantially all of the assets of the Participating Company to another employer outside of the controlled group of corporations (whether the Participating Employee is offered employment or accepts employment with the other employer), (d) the Termination of the Participating Employee by a Participating Company followed by employment within a reasonable time with a company or other entity in which the Company owns, directly or indirectly, at least a 50% interest, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this Program, the vested and unvested portion of the Award shall be forfeited unless (i) the Authorized Party may, in its or his sole discretion, determine that all or a portion of any Award shall not be canceled or (ii) the Award is retained as a result of another provision of this Program.

8.Transfer. Transfer of employment between Participating Companies shall not constitute Termination for the purpose of any Award granted under the Program.

9.Change in Control. If a Change in Control occurs and the Participating Employee is Terminated, all restrictions applicable to any Award shall lapse and the Stock Options will remain exercisable for the rest of their term.

IV. EXERCISE AND PAYMENT FOR SHARES

1.Upon the vesting of restrictions, the Participating Employee can initiate exercising the Stock Options by contacting the third-party administrator designated by the Plan Administrator.

2.In all cases, if a Participating Employee is subject to trading restrictions, authorization prior to exercising of Stock Options must be obtained by Senior Counsel SEC.

3.Upon exercise the Participating Employee is responsible for paying the cost of the Shares at Grant Price, along with applicable taxes and fees (see Taxation of Distributions). The payment may be made in cash or by tendering Shares.

V. TAX WITHHOLDING

1.Exercise of a Participating Employee’s Award will generally result in required tax withholding or expatriate hypothetical tax obligation. The Participating Employee is responsible for required withholding taxes associated with an exercise.

2.The Company will generally withhold Shares for taxes to meet tax obligations. The value of the Shares withheld for this purpose shall not exceed the minimum withholding amount required by applicable laws and regulations. With the Plan Administrator’s approval, Participating Employees may request a different withholding rate.

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3.If the Participating Employee spent time as an expatriate outside of their home country the Participating Employee will be tax equalized, with the intent that the Participating Employee receives no adverse tax consequences for their expatriate service, which could be different depending upon each country. The Participating Employee’s distribution will reflect any expatriate hypothetical tax obligation.

4.The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner. The Plan Administrator will take steps, as it deems necessary or desirable for the withholding of any taxes that are required by laws or regulations of any governmental authority in connection with any distribution.

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EX-10.3

Exhibit 10.3

	PHILLIPS 66 Terms & Conditions For [*] Restricted Stock Program
Grant Date: Grant Price US/UK: Grant Price Global: Vesting Schedule:	[*] [*] [*] Third Anniversary of Grant Date (grade 18+) / 1/3rd on the First, Second and Third Anniversary of Grant Date (grade 13-17)

This document applies to Awards made under the Restricted Stock Program (“Program”) provided under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 (“Plan”) or any successor to the Plan. The Program is designed to benefit the Company's shareholders by encouraging high levels of performance and alignment by Eligible Employees whose performance is a key element in achieving the Company's corporate strategies. Phillips 66 reserves the right to discontinue or change this Program at any time.

This document defines the general conditions, eligibility, and determination of Awards. It also addresses what happens in the event of employment termination, and how Awards are distributed and taxed.

All Award amounts and the terms and conditions of any Awards are within the discretion of the Committee.

•Nothing in this Program should be construed to limit the discretion of the Committee in determining the amount and terms and conditions of an Award, including the discretion to forego an Award for any Employee. The Authorized Party retains all discretion.

•All Awards shall comply with the required terms and conditions.

•No Award shall exceed any limit set forth in the Plan.

•If the Authorized Party, in its sole discretion, determines an Award has the possibility of violating any law, regulation, or decree pertaining to the Company or the Participating Employee, the Authorized Party may freeze or suspend the Participating Employee’s Award until the time as having the Award would no longer, in the sole discretion of the Authorized Party, have the possibility of violating any laws, regulation, or decree.

•This procedure will continue in effect until amended, rescinded, or terminated.

Capitalized terms shall have the meaning designated in this Program. Capitalized terms not defined in this Program shall have the meaning set forth in the Plan.

•Authorized Party means the person who is authorized to approve an Award, exercise discretion, or take action under the Program pursuant to the Plan. With regard to the Executive Chairman, CEO and Senior Officers, the Committee is the Authorized Party. With regard to other Employees, the CEO is the Authorized Party, although the Committee may act concurrently as the Authorized Party.

•Award means cash, stock option, performance share unit, restricted stock unit or any other form of equity or cash pursuant to the Program’s applicable terms, conditions and limitations as the Authorized Party may provide in order to fulfill the objectives of the Program.

•Award Agreement means any written or electronic agreement setting forth, or incorporating by reference, the terms, conditions, and limitations applicable to an Award to a Participating Employee. An Award Agreement may be unilaterally issued by the Company and need not be executed or countersigned by the Participating Employee.

•Award Value means the following:

◦For Participating Employees that are on the US/UK Payroll and are resident in the US/UK on the Grant Date, Award Value means the Fair Market Value of one Share.

◦For Participating Employees that are either not on the US/UK Payroll or are not resident in the US/UK on the Grant Date, Award Value most generally means the Fair Market Value of one Share reduced by an amount equal to twelve times, for employees at grades 18 and above or for any retention award (assuming 3-year, cliff vesting), or eight times, for annual Awards to employees at grades 13 through 17, the amount of the most recently approved ordinary cash dividend. This is to offset that these employees are not eligible for the Dividend Equivalent payments that generally occur during the vesting schedule. However, should reduced dividend payments be anticipated or an alternate vesting schedule used, the Authorized Party may request a different Award Value.

•Board means the Board of Directors of Phillips 66.

•CEO means the Chief Executive Officer of Phillips 66. Where applicable, CEO also refers to the person holding that title but acting as a Special Equity Award Committee pursuant to the authority granted by the Board.

•Committee means the Human Resources and Compensation Committee of the Board of Directors of the Company, or any successor committee to it.

•Company means Phillips 66, a Delaware Corporation.

•Disability means a disability for which the Employee in question has been determined to be entitled to either, (i) benefits under the applicable long-term disability plan of the Participating Company or (ii) disability benefits under the Social Security Act. In the absence of any determination, the Authorized Party may make a determination that the Employee has a Disability.

•Dividend Equivalents means, with respect to Restricted Stock Units, an amount equal to ordinary dividends that are payable to shareholders of record during the Restriction Period on a like number of Shares.

•Eligible Employee shall include Employees that meet the participation requirements for this Program. Being an Eligible Employee does not guarantee an Award.

•Employee shall include employees of Phillips 66 and its subsidiaries, as designated in the records of the Company and its subsidiaries.

•Exchange Rate means the applicable currency Exchange Rate as published in the Phillips 66 and Consolidated Subsidiaries Corporate Booking Ratesfor the relevant date; or, if the appropriate country is not listed on that date, the applicable currency Exchange Rate as published on the last date prior to the relevant date.

•Executive Employee means an Eligible Employee in Salary Grade 21 or higher.

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•Fair Market Value means, as of a particular date, the mean between the highest and lowest sales price per share on the consolidated transaction reporting system for the principal national securities exchange on which shares are listed on that date rounded to 4 decimals, or, if there is no sale reported on that date, on the preceding date on which a sale is reported or, at the discretion of the Committee, the price prevailing on the exchange at a designated time.

•Grant Date means the date the Award is granted.

•Layoff means an applicable Termination due to layoff under the Phillips 66 Severance Pay Plan, Phillips 66 Executive Severance Plan, or the Phillips 66 Key Employee Change in Control Severance Plan, or layoff or redundancy under any similar layoff or redundancy plan which the Participating Company may adopt from time to time. If all or any portion of the benefits under the redundancy or layoff plan are contingent on the Employee’s signing a Release of Liability or covenant not to compete or both, the Termination shall not be considered as a “Layoff” for purposes of the Program unless the Employee executes and does not revoke a Release of Liability, a covenant not to compete, or both, acceptable to the Company, under the terms of the layoff or redundancy plan. To be considered a “Layoff” under this Program, a Termination must also be considered a Separation from Service.

•Participating Company includes Phillips 66 and its 100% owned subsidiaries, including both those directly owned and those owned through subsidiaries, whose participation has been approved by the Authorized Party.

•Participating Employee shall include Eligible Employee receiving an Award under this Program. Being a Participating Employee does not guarantee a distribution.

•Plan Administrator means the Phillips 66 employee internally responsible for the administration of Programs.

•Release of Liability is a form provided to an Employee upon Layoff. Unless the Participating Employee executes and does not revoke the Release of Liability, the Participating Employee forfeits all Awards.

•Restricted Stock Unit means a unit equal to one Share that is subject to forfeiture provisions or that has certain restrictions attached to the ownership thereof. Restricted Stock Units do not have any voting rights or other rights generally associated with Shares and are merely an obligation of the Company to register stock in accordance with the terms and conditions applicable to the Restricted Stock Units.

•Retirement means Termination at age 55 or older with a minimum of 5 years of service with a Participating Company; provided, however, that with regard to an Employee not on the United States payroll, the Authorized Party may approve the use of a different definition. Service is defined by the policies of the Participating Company.

•RSU Target Percentage means the percentage as approved in Appendix B.

•Salary is expressed as an annual amount in USD, prior to any voluntary salary reduction. In cases where a Participating Employee’s Salary has been increased due to a local market factor (as the term is used in the Company’s compensation practice; for example, the London Allowance) the Salary shall be reduced by the effect of this factor. For Participating Employees paid in a currency other than U.S. Dollars, Salary will be expressed in USD using the applicable Exchange Rate as of the first of the month immediately preceding the Grant Date of the Award.

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•Salary for Awards made in any month other than February is determined as of the first of the month coincident with or immediately following Grant Date, or as otherwise determined by the Authorized Party.

◦Salary for Awards made in February is determined as of the last day of the preceding calendar year if the Employee was employed in the preceding calendar year.

◦Salary for Awards made in February is determined as of the first of the month immediately preceding Grant Date if the Employee was hired on or before February 1 in the year of the grant.

◦Salary for Awards made to Executives Employees in February is determined as of the date of hire or promotion if the Executive Employee was hired or promoted into an Executive position becoming a new Executive Employee on or before February 1 of the year of the grant.

•Salary Grade means a classification level for Employees under the practices of the Participating Company.

◦Salary Grade for Awards made in any month other than February is determined as of the first of the month coincident with or immediately following Grant Date, or as otherwise determined by the Authorized Party.

◦Salary Grade for Awards made in February is determined as of the last day of the preceding calendar year if the Employee was employed in the preceding calendar year.

◦Salary Grade for Awards made in February is determined as of the first of the month immediately preceding Grant Date if the Employee was hired on or before February 1 in the year of the grant.

◦Salary Grade for Awards made to Executives Employees in February is determined as of the date of hire or promotion if the Executive Employee was hired or promoted into an Executive position becoming a new Executive Employee on or before February 1 of the year of the grant.

•Senior Officer means all officers of the Company who report directly to the CEO, and all other officers of the Company who are a Senior Vice President and above, or who are reporting officers under Section 16 of the Securities Exchange Act of 1934.

•Separation from Service means “separation from service” as that term is used in section 409A of the Internal Revenue Code.

•Shares means shares of PSX common stock.

•Termination means cessation of employment with the Participating Companies, determined in accordance with the policies and practices of the Participating Company for whom the Employee was last performing services.

•Termination Date is defined as the first date an Employee is no longer employed by and performing services for a Participating Company.

I. General Conditions

1.The Committee, or to the extent authorized by the Committee, the CEO, or another designated individual or committee, shall have the right to terminate, suspend, withdraw, amend, or modify the Program in whole or in part at any time. The CEO shall review and approve this document and may amend it as necessary.

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2.The Board has previously delegated to the CEO, as a Special Equity Award Committee of the Board, the authority to approve grants of Awards under the Plan for Employees that are not the CEO or a Senior Officer. All Awards shall be under and in accordance with the terms of the Plan and the Program. The pool of shares subject to this delegation of authority to the CEO shall be the remaining shares available under the Plan. For this purpose, the CEO is the Authorized Party. The Board has not delegated to the CEO, as a Special Equity Award Committee of the Board, the authority to approve Awards under the Plan to persons who are the CEO or Senior Officers. The Committee retains this authority for the CEO and Senior Officers as the Authorized Party.

3.The Plan Administrator is responsible for the implementation of Awards given by the Authorized Party. The Plan Administrator may from time to time designate other individuals to assist in this process, including duties and responsibilities as deemed appropriate. These duties and responsibilities shall include, but are not limited to, the establishment of appropriate systems, accounts, and other necessary record keeping activities along with the preparation and execution of agreements or other grant documents between the Company and the Participating Employee evidencing Awards, but shall not include any discretionary authority with respect to substantive decisions or matters regarding the Plan, Programs, or Awards. The Plan Administrator, or other individuals designated by the Plan Administrator, may hire third party administrators to deal with the day-to-day administration of Awards under the Program, and shall monitor third party administrators. Third party administrators may require the use of forms and methods, and impose time limitations in the administration of the Program as are reasonable, subject to the discretion of the Plan Administrator and the Plan Administrator’s designees in administering the Program.

4.Awards are subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. Awards are also subject to forfeiture or recoupment in the event a Participating Employee’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit & Finance Committee of the Board. If the Authorized Party determines that, subsequent to the receipt of any Award, the Participating Employee has engaged or is engaging in any activity which, in the sole judgment of the Authorized Party, is or may be detrimental to the Participating Company, the Authorized Party may cancel all or part of any or all Awards to that Participating Employee.

5.Upon any change in the outstanding stock of the Company by reason of any stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other similar changes, the Committee shall make corresponding adjustments, as appropriate.

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6.All Restricted Stock Unit award information is confidential and should not be disclosed for any reason, other than as required for appropriate financial reporting purposes. The Company requests that Employees keep wages, benefits, bonuses and any other form of compensation confidential, and avoid providing or otherwise broadcasting this information with other Company employees, or with any third-party that does not have a bona fide need to know. Any unauthorized disclosure of confidential information by employees may impede our ability to effectively compete for talent, may create unnecessary conflict and disputes, and could lead to cancellation of this award and/or disciplinary action up to and including termination of employment.

7.In addition to the terms and conditions described, Awards are subject to all other applicable provisions of the Plan. The decisions of the Committee with respect to questions arising as to the interpretation of the Plan or the Award Agreement and as to findings of fact shall be final, conclusive, and binding.

8.No provision of this document shall confer any right upon the Employee to continue employment with any Participating Company.

II. Determination of Award

The Award shall be held in escrow by the Company until the lapsing of restrictions placed upon the Restricted Stock Units. Participating Employees shall not have the right to sell, transfer, assign, or otherwise dispose of Restricted Stock Units until the escrow is terminated.

III. Effect of Termination of Employment

The following is meant to clarify Award treatment in the event of various Terminations for Participating Employees with Awards. In all instances below except Layoff, Fair Market Value is calculated as of Termination Date.

1.Death. If a Participating Employee dies while in the employ of a Participating Company, the Participating Employee’s rights to any Award will pass to the beneficiary on file with the third-party administrator, or in the absence of a designated beneficiary, to the executor or administrator of the estate of the Participating Employee. However, the Award will be subject to the terms and conditions that applied to the Participating Employee before their death. Rights cannot be assigned or transferred other than by will or the laws of descent and distribution. No transfer of an Award by the Participating Employee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the will and any other evidence as the Company may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of the Award. If a beneficiary designation conflicts with an assignment by will or under the laws of descent and distribution, the beneficiary designation will prevail.

2.Disability. If a Participating Employee terminates employment by reason of Disability and has Awards with restrictions, the Participating Employee shall retain all rights provided by the Award at the time of Termination.

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3.Layoff. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Layoff:

•If the Participating Employee’s employment with a Participating Company is terminated by reason of Layoff, and the Participating Employee completes the required Release of Liability, then the Participating Employee shall retain a prorated portion of the Award. The percent of the Award to be retained will be computed by multiplying the original number of Shares granted by a percentage as outlined in Attachment A for the annual Awards made in February. All other Awards will be prorated by a fraction, the numerator of which is the number of months from Grant Date to Termination Date and the denominator of which is 12.

•In the case of Layoff, if a Participating Employee is eligible to retain an Award, the Fair Market Value will be determined as of:

◦For US employees, the eighth day following the signed date of the Release of Liability.

◦For UK, Canada, Singapore, and Austria employees, Termination Date.

4.Retirement. The following details how Awards with restrictions are handled when a Participating Employee Terminates by reason of Retirement:

•If the Participating Employee’s employment with a Participating Company is terminated by reason of Retirement, then the Participating Employee shall retain a prorated portion of the annual Awards made in February. The percent of the Award to be retained will be computed by multiplying the original number of Shares granted by a percentage as outlined in Attachment A for the annual Awards made in February. This provision does not apply to any other Awards.

5.If the Participating Employee Terminates for any reason other than death, Disability, Layoff, or Retirement, the Award shall be canceled and all rights thereunder shall cease; however, the Authorized Party may, in its sole discretion, determine that all or any portion of the Award shall not be cancelled due to Termination.

6.Leaves. Whether any leave of absence shall constitute Termination for the purposes of any Award granted under these Programs shall be determined by the Plan Administrator in each case in accordance with applicable law and by application of the policies and procedures adopted by the Company in relation to such leave of absence.

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7.Divestiture, Outsourcing or Move to Joint Venture. If, after the date the Award is granted, a Participating Employee ceases to be employed by a Participating Company as a result of (a) the outsourcing of a function, (b) the sale or transfer of all or a portion of the equity interest of the Participating Company (removing it from the controlled group of companies of which the Company is a part), (c) the sale of all or substantially all of the assets of the Participating Company to another employer outside of the controlled group of corporations (whether the Participating Employee is offered employment or accepts employment with the other employer), (d) the Termination of the Participating Employee by a Participating Company followed by employment within a reasonable time with a company or other entity in which the Company owns, directly or indirectly, at least a 50% interest, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this Program, the Award shall be forfeited unless (i) the Authorized Party may, in its or his sole discretion, determine that all or a portion of any Award shall not be canceled or (ii) the Award is retained as a result of another provision of this Program.

8.Transfer. Transfer of employment between Participating Companies shall not constitute Termination for the purpose of any Award granted under the Program.

9.Change in Control. If a Change in Control occurs and the Participating Employee is Terminated, all restrictions applicable to any Award shall lapse and the Shares will become immediately vested.

IV. Distributions

1.For annual Awards made in February to employees at grade 18 and above, restrictions shall lapse on the third anniversary Grant Date. For annual Awards made in February to employees in grades 13 through 17, restrictions shall lapse one third (rounded down to the nearest whole share) on the first and second anniversary of the Grant Date and the remainder on the third anniversary of the Grant Date. For other Awards, restrictions generally lapse on the third anniversary of the Grant Date, unless the Authorized Party approves a different lapse schedule.

2.Restricted Stock Units granted to Participating Employees who are on the US/UK Payroll and are resident in the US/UK on the Grant Date shall be paid a Dividend Equivalent at the same times as an ordinary cash dividend is determined by the Company to be paid, generally quarterly. Current tax law dictates these payments are taxable as compensation (ordinary income) in the year they are distributed. This payment will be paid through the standard payroll process and cannot be reinvested.

3.Restricted Stock Units granted to Participating Employees who are either not on the US/UK Payroll or are not resident in the US/UK on the Grant Date, shall not accrue a Dividend Equivalent. The value of their Award is increased to reflect no payment of a Dividend Equivalent.

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4.Upon the lapsing of restrictions, the number of Shares registered to the Participating Employee will be equal to the Restricted Stock Units for which the restrictions have lapsed and will be transferred less shares held for taxes to the Participant’s brokerage account held with the third party administrator. Shares shall be registered no later than 2 ½ months after the end of the calendar year in which the restrictions lapse.

5.If the Plan Administrator determines that registering the Shares is prohibited by law, regulation, or decree, or where the cost of legal compliance to issue the Shares is reasonably expensive, the Fair Market Value of the Shares shall be paid in cash instead of registering Shares. Cash payouts are only permitted where legal restrictions exist. Cash payout shall be made no later than 2 ½ months after the end of the calendar year in which the restrictions lapse. Awards made to grantees in the People’s Republic of China will only be settled in cash onshore in Chinese currency.

6.No Award or distribution that is considered income pursuant to Section 409A of the Internal Revenue Code, shall be settled or paid prior to six months after the Employee’s Termination from the Company and its subsidiaries (or, if earlier, the date of death).

7.If applicable, court ordered garnishments or tax levies will be withheld.

8.The Participating Employee’s distribution, and any required taxation, will be communicated to the Participating Employee at time of the distribution.

9.The Fair Market Value used upon the lapsing of restrictions is generally the Fair Market Value for the date on which the restrictions lapse.

V. Taxation of Distributions

1.Distribution of a Participating Employee’s Award will reflect required tax withholding or expatriate hypothetical tax obligation. The Participating Employee is responsible for required withholding taxes associated with a distribution.

2.If on after December 1 following the Grant Date for annual Awards made in February, a Participating Employee is determined to be eligible for Retirement, the Award is considered vested for FICA purposes because there is no longer a substantial risk of forfeiture. At this time, FICA tax and income tax related to the FICA withholding, will be paid by withholding Shares from the Award. When the remaining Award lapses, the company will withhold Shares to cover the federal tax (and state and local tax, where applicable).

3.The Company will generally withhold Shares for taxes to meet tax obligations. The value of the Shares withheld for this purpose shall not exceed the minimum withholding amount required by applicable laws and regulations. With the Plan Administrator’s approval, Participating Employees may request a different withholding rate.

4.If the Participating Employee spent time as an expatriate outside of their home country the Participating Employee will be tax equalized, with the intent that the Participating Employee receives no adverse tax consequences for their expatriate service, which could

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be different depending upon each country. The Participating Employee’s distribution will reflect any expatriate hypothetical tax obligation.

5.The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner. The Plan Administrator will take steps, as it deems necessary or desirable for the withholding of any taxes that are required by laws or regulations of any governmental authority in connection with any distribution.

VI. Sale of Shares

1.Upon the vesting of restrictions, the Participating Employee can initiate sale or transfer of the Shares by contacting the third-party administrator designated by the Plan Administrator.

2.In all cases, if a Participating Employee is subject to trading restrictions, authorization prior to selling of Shares must be obtained by Senior Counsel SEC.

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EX-10.4

Exhibit 10.4

PHILLIPS 66

Terms & Conditions

For

Performance Share Program - Performance Period [*]

This document applies to Awards made under the Performance Share Program (“Program”) for the Performance Period [*] provided under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 (“Plan”) or any successor to the Plan. Phillips 66 reserves the right to discontinue or change this Program at any time.

Capitalized terms shall have the meaning designated in this Program. Capitalized terms not defined in this Program shall have the meaning set forth in the Plan.

•Authorized Party means the person who is authorized to approve an Award, exercise discretion, or take action under the Program pursuant to the Plan. With regard to the Executive Chairman, CEO and Senior Officers, the Committee is the Authorized Party. With regard to other Employees, the CEO is the Authorized Party, although the Committee may act concurrently as the Authorized Party.

•Award means cash, stock option, performance share unit, restricted stock unit or any other form of equity or cash pursuant to the Program’s applicable terms, conditions and limitations as the Authorized Party may provide in order to fulfill the objectives of the Program.

•Award Agreement means any written or electronic agreement setting forth, or incorporating by reference, the terms, conditions, and limitations applicable to an Award to a Participating Employee. An Award Agreement may be unilaterally issued by the Company and need not be executed or countersigned by the Participating Employee.

•Board means the Board of Directors of Phillips 66.

•Cash Denominated Distribution means a full distribution made from the Program, paid to the Participating Employee in cash.

•CEO means the Chief Executive Officer of Phillips 66. Where applicable, CEO also refers to the person holding that title but acting as a Special Equity Award Committee pursuant to the authority granted by the Board.

•Committee means the Human Resources and Compensation Committee of the Board of Directors of the Company, or any successor committee to it.

•Company means Phillips 66, a Delaware Corporation.

•Disability means a disability for which the Employee in question has been determined to be entitled to either, (i) benefits under the applicable long-term disability plan of the Participating Company or (ii) disability benefits under the Social Security Act. In the absence of any determination, the Authorized Party may make a determination that the Employee has a Disability.

•Distribution means the value that is given to the Participating Employee after approval by the Committee. In most cases, Distributions will be made in the form of cash, however the Committee reserves the right to make Distributions in the form of grants of share-based Awards, or any other form the Committee determines appropriate.

•Eligible Employee shall include Employees that meet the participation requirements for this Program. Being an Eligible Employee does not guarantee an Award.

•Employee shall include employees of Phillips 66 and its subsidiaries, as designated in the records of the Company and its subsidiaries.

•Exchange Rate means the applicable currency Exchange Rate as published in the Phillips 66 and Consolidated Subsidiaries Corporate Booking Ratesfor the relevant date; or, if the appropriate country is not listed on that date, the applicable currency Exchange Rate as published on the last date prior to the relevant date.

•Fair Market Value means, as of a particular date, the mean between the highest and lowest sales price per share on the consolidated transaction reporting system for the principal national securities exchange on which shares are listed on that date rounded to 5 decimals, or, if there is no sale reported on that date, on the preceding date on which a sale is reported or, at the discretion of the Committee, the price prevailing on the exchange at a designated time.

•Layoff means an applicable Termination due to layoff under the Phillips 66 Severance Pay Plan, Phillips 66 Executive Severance Plan, or the Phillips 66 Key Employee Change in Control Severance Plan, or layoff or redundancy under any similar layoff or redundancy plan which the Participating Company may adopt from time to time. If all or any portion of the benefits under the redundancy or layoff plan are contingent on the Employee’s signing a Release of Liability or covenant not to compete or both, the Termination shall not be considered as a “Layoff” for purposes of the Program unless the Employee executes and does not revoke a Release of Liability, a covenant not to compete, or both, acceptable to the Company, under the terms of the layoff or redundancy plan.

•Participating Company includes Phillips 66 and its 100% owned subsidiaries, including both those directly owned and those owned through subsidiaries, whose participation has been approved by the Authorized Party.

•Participating Employee shall include Eligible Employees receiving a Share Denominated Target. Being a Participating Employee does not guarantee a Distribution.

•Performance Measures means the performance criteria that will be used to value the performance of the Company at the conclusion of the Performance Period, prior to the Distribution.

•Performance Period means January 1, 2023 through December 31, 2025.

•Plan Administrator means the Phillips 66 Employee, internally responsible for administration of Programs.

•Release of Liability is a form provided to an Employee upon Layoff. Unless the Participating Employee executes and does not revoke the Release of Liability, the Participating Employee forfeits all Awards.

•Retirement means Termination at age 55 or older with a minimum of 5 years of service with a Participating Company; provided, however, that with regard to an Employee not on the United States payroll, the Authorized Party may approve the use of a different definition. Service is defined by the policies of the Participating Company.

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•Salary means the annual base pay in effect on December 31st of the year preceding the beginning of the Performance Period in which the Eligible Employee becomes a Participating Employee.

•Salary Grade means a classification level for Employees under the practices of the Participating Company.

•Senior Officer means all officers of the Company who report directly to the CEO, and all other officers of the Company who are a Senior Vice President and above, or who are reporting officers under Section 16 of the Securities Exchange Act of 1934.

•Share Denominated Distribution, expressed as a number of shares, means the value of a Share Denominated Target if a full distribution was made from the Program and granted to the Participating Employee in equity. At the time of Distribution, the Committee determines if the Share Denominated Distribution will be granted to the Participating Employee or if it will be converted to a Cash Denominated Distribution.

•Share Denominated Target means the value calculated for a Participating Employee, denominated in shares. Share Denominated Targets are evaluated based on Performance Measures at the conclusion of the Performance Period and then distributed to the Participating Employee. Share Denominated Targets are rounded to the nearest whole share.

•Termination means cessation of employment with the Participating Companies, determined in accordance with the policies and practices of the Participating Company for whom the Employee was last performing services.

I.General Conditions

1.The Committee, or to the extent authorized by the Committee, the CEO, or another designated individual or committee, shall have the right to terminate, suspend, withdraw, amend, or modify the Program in whole or in part at any time. The CEO shall review and approve this document and may amend it as necessary.

2.Awards are subject to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act. Awards are also subject to forfeiture or recoupment in the event a Participating Employee’s negligence or misconduct results in materially misstated financial or other data, as determined by the Human Resources & Compensation Committee and the Audit & Finance Committee of the Board. If the Authorized Party determines that, subsequent to the receipt of any Award, the Participating Employee has engaged or is engaging in any activity which, in the sole judgment of the Authorized Party, is or may be detrimental to the Participating Company, the Authorized Party may cancel all or part of any or all Awards to that Participating Employee.

3.Upon any change in the outstanding stock of the Company by reason of any stock dividend, stock split, reverse stock split, recapitalization, reclassification, or other similar changes, the Committee shall make corresponding adjustments, as appropriate.

4.In addition to the terms and conditions described, Awards are subject to all other applicable provisions of the Plan. The decisions of the Committee with respect to questions arising as to the interpretation of the Plan or the Award Agreement and as to findings of fact shall be final, conclusive, and binding.

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5.No provision of this document shall confer any right upon the Employee to continue employment with any Participating Company.

6.The Award Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware.

7.Without the consent of the Employee, the Award Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision which may be defective or inconsistent with any other provision, or (ii) to add to the covenants and agreements of the Company for the benefit of an Employee or to add to the rights of an Employee or to surrender any right or power reserved to or conferred upon the Company in the Award Agreement, provided, in each case, that such changes or corrections shall not adversely affect the rights of the Employee with respect to the grant of an Award evidenced without the Employee’s consent, or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities or tax laws.

II.Determination of Share Denominated Targets

Share Denominated Targets for Participating Employees under the Program are generally made annually at the beginning of the Performance Period. Share Denominated Targets may, however, be provided to Participating Employees at other times during the Performance Period. Salary, Salary Grade, Phillips 66 stock price, the length of time the Employee will be a Participating Employee in the Performance Period, and in some cases, historical performance are taken into consideration when determining the Share Denominated Target. The Authorized Party shall have the authority to apply discretion as appropriate to increase or decrease the Share Denominated Target. Participating Employees that have a Salary Grade change during the Performance Period may have their Share Denominated Target adjusted to reflect their change in responsibility.

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III.Effect of Termination of Employment

The following is meant to clarify what happens in the event of various Terminations for Participating Employees with a Share Denominated Target. This action has no impact on the timing of the Distribution. Generally, Distributions will only be made at the conclusion of the Performance Period.

1.Death. If a Participating Employee dies during the Performance Period, the Share Denominated Target under the Program shall not be prorated. The Participating Employee’s rights to any Share Denominated Target will pass to the designated beneficiary on file with the third-party administrator or in the absence of a designated beneficiary, to the executor or administrator of the estate of the Participating Employee. However, the Award will be subject to the terms and conditions that applied to the Participating Employee before their death. No transfer of a Share Denominated Target by the Participating Employee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the will and any other evidence as the Company may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of the Share Denominated Target. In the event that a beneficiary designation conflicts with an assignment by will or under the laws of descent and distribution, the beneficiary designation will prevail.

2.Disability. If a Participating Employee terminates employment by reason of Disability during the Performance Period and has a Share Denominated Target under the Program, the Share Denominated Target shall not be prorated. The Participating Employee shall retain all rights provided by the Award at the time of Termination.

3.Retirement or Layoff. If Termination occurs prior to the conclusion of the Performance Period as a result of Retirement or Layoff, the Participating Employee’s Share Denominated Target shall be prorated by a fraction, the numerator of which is the number of full calendar months of participation during the Performance Period completed prior to the applicable event and the denominator is the number of calendar months in the Performance Period provided that the Participating Employee has completed at least two months of participation during the Performance Period.

4.If the Participating Employee Terminates for any reason other than death, Disability, Layoff, or Retirement, the Share Denominated Target shall be canceled, and all rights thereunder shall cease.

5.Leaves. Whether any leave of absence shall constitute Termination for the purposes of any Share Denominated Target granted under these Programs shall be determined by the Plan Administrator. The determination will be made in each case in accordance with applicable law and by application of the policies and procedures adopted by the Company in relation to such leave of absence.

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6.Divestiture, Outsourcing or Move to Joint Venture. If, after the date a Share Denominated Target is granted, a Participating Employee ceases to be employed by a Participating Company as a result of (a) the outsourcing of a function, (b) the sale or transfer of all or a portion of the equity interest of the Participating Company (removing it from the controlled group of companies of which the Company is a part), (c) the sale of all or substantially all of the assets of the Participating Company to another employer outside of the controlled group of corporations (whether the Participating Employee is offered employment or accepts employment with the other employer), (d) the Termination of the Participating Employee by a Participating Company followed by employment within a reasonable time with a company or other entity in which the Company owns, directly or indirectly, at least a 50% interest, or (e) any other sale of assets determined by the Authorized Party to be considered a divestiture under this Program, the Share Denominated Target shall be forfeited unless the Share Denominated Target is retained as a result of another provision of this Program.

7.Transfer. Transfer of employment between Participating Companies shall not constitute Termination for the purpose of this Program.

8.Change in Control. If a Change in Control occurs the Authorized Party has discretion to determine the effect on Share Denominated Targets.

IV.Performance Evaluation of Share Denominated Target

At the completion of the Performance Period, the Committee will review the results achieved under the Performance Measures approved by the Committee and, in its sole judgment, adjust the Share Denominated Target by a percentage (from 0-200%) as deemed appropriate, at which point the Share Denominated Target will be known as the Share Denominated Distribution. Relative Performance Measures will be compared to a peer group of companies as determined by the Committee.

Two Performance Measures will be used for the Performance Period:

•Relative Total Shareholder Return (TSR) weighted at 50%

•Absolute Return on Capital Employed (ROCE) weighted at 50%

1.The Committee may change the weighting to be applied to Performance Measures at any time during the Performance Period. In addition, the Committee may, in its sole discretion, add or delete Performance Measures at the beginning or during the Performance Period. In so doing, the Committee shall specify the weighting to be applied to any additional Performance Measures included in the Program.

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2.The payout percentage for the portion of the PSP measured against TSR will not be more than 100% if the absolute TSR for the Performance Period is negative.

•The Company’s results related to the relative Performance Measures will be compared as follows; however, the list of comparator companies may be added to, or deleted from, if the Committee determines that the change is warranted:TSR: CVR Energy (CVI), Delek (DK), HF Sinclair (DINO), Marathon Petroleum (MPC), PBF Energy (PBF), Valero (VLO), Dow (DOW), LyondellBasell (LYB), Westlake Chemical (WLK), ONEOK (OKE), Targa Resources (TRGP), Williams Companies (WMB) and the S&P 100 index.

V.Distributions

Distributions made from the Program for the [*] performance period will be made as Cash Denominated Distributions.

1.Cash Denominated Distributions provided under this Program will be settled in the form of cash, to be paid out as soon as administratively feasible after the date approved by the Authorized Party, provided that the cash payment be made no later than 2½ months after the end of the calendar year in which the Authorized Party has approved the Cash Denominated Distribution.

•The value of a Cash Denominated Distribution shall be determined by multiplying the Share Denominated Distribution by an average of the Fair Market Value of Phillips 66 stock for the last 20 trading days of the Performance Period.

2.If applicable, court ordered garnishments or tax levies will be withheld.

3.The Participating Employee’s Distribution, and any required taxation, will be communicated to the Participating Employee at time of the Distribution.

VI.Taxation of Distributions

1.In all cases the Participating Employee will be responsible to pay all required withholding taxes associated with a Distribution. This withholding tax obligation includes, but is not limited to, federal, state, and local taxes, including applicable non-U.S. taxes such as U.K. PAYE.

2.The Company may take appropriate measures to ensure that corrective actions related to withholding tax obligations are completed in a timely manner. The Plan Administrator will take the steps, as it deems necessary or desirable for the withholding of any taxes that are required by laws or regulations of any governmental authority in connection with any Distribution.

3.If the Participating Employee spent time as an expatriate outside of their home country the Participating Employee will be tax equalized, with the intent that the Participating Employee receives no adverse tax consequences for their expatriate service, which could be different depending upon each country. The Participating Employee’s Distribution will reflect any expatriate hypothetical tax obligation.

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EX-10.5

Exhibit 10.5

Greg Garland

Chairman & CEO

Phillips 66

2331 CityWest Blvd.

Houston, Texas 77042

832.765.1319

October 9, 2021

Ms. Vanessa Sutherland

c/o Peter Boerner

Major, Lindsey & Africa

Dear Vanessa:

It is with pleasure that we offer you a position in the Phillips 66 organization. This offer provides you with the opportunity to join the Company at an exciting time.

The details of the offer are as follows:

Job Title:	Executive Vice President, Legal, Government Affairs, General Counsel and Corporate Secretary
Salary:	$750,000/year
Location:	Houston, Texas
Manager:	Greg Garland
Desired Reporting Date:	January 17, 2022

Salary and Variable Cash Incentive Program

Subsequent changes to your salary will be based on your performance and our compensation policy.

In addition to your base salary, you will be eligible to participate in the Variable Cash Incentive Program (VCIP). The Human Resources and Compensation Committee generally approves the awards annually after the completion of the program year. Individual awards are based upon Company performance. The awards can range from 0% to 200% of the target. Your target award will be 85% of your eligible earnings paid during the year.

Executive Programs

In addition to your base salary and VCIP, you will be eligible to participate in the following executive level compensation programs:

Restricted Stock Unit Program: This is an annual program, which, if approved, could result in you receiving an award. The Special Equity Awards Committee generally approves the awards annually in February.

Under the 2021 compensation structure, you have a target award of 80% of your base salary. The 2022 grant, which would be approved by the HRCC in Feb. 2022, would be based on your starting salary.

Stock Option Program: This is an annual program, which, if approved, could result in you receiving an award. The Special Equity Awards Committee generally approves the awards annually in February.

Under the 2021 compensation structure, you have a target award of 80% of your base salary. The 2022 grant, which would be approved by the HRCC in Feb. 2022, would be based on your starting salary.

Performance Shares: This is a program where target awards are contingent shares of Phillips 66 stock that are earned based on the Company’s performance over a three-year period, and approved awards will be paid out in cash. Your target award for the next performance period (PSP 2022 – 2024) under the current compensation structure, subject to program rules, will be 160% of your starting salary. You will receive a pro-rata target for PSP 2021 – 2023 of 13,362 units.

Inducement Grants

We recognize that you will be ineligible for certain equity awards as well as other forms of compensation due to timing of employment with Phillips 66; therefore, we will also provide the following:

Restricted Stock Unit Award: Upon completion of your first day at Phillips 66, you will receive an award of restricted stock units. The number of units will be determined by dividing $3,000,000 by the Fair Market Value of Phillips 66 stock on the date of your employment. The restrictions would lapse and the units vest on the third anniversary of employment with Phillips 66. If that is a non-trading date, the last preceding date will be used. Units will be eligible for dividend equivalents, which are paid on a quarterly basis.

Vacation Benefit

A special vacation benefit is available for experienced exempt hires. Based on your related prior work experience, you will be granted 28 years of service recognition to adjust your Vacation Eligibility Date. This adjusted Vacation Eligibility Date will be used to compute all future vacation according to the Phillips 66 Vacation policy. We are pleased to provide a vacation benefit of 5 weeks.

19/30 Program

If available at your site, the 19/30 Program is designed to enable employees the flexibility of taking one personal day off each month to spend as they wish - with family and friends, pursuing outside interests, or taking care of personal business.

Employees must work an extra 30 minutes each day to participate in the program. The 19/30 day off each month is scheduled like vacation with supervisor's approval in full day increments only. The 19/30 day cannot be carried over from month to month.

Relocation

Your relocation will be administered under the following Phillips 66 Relocation Policy:

USA Domestic Exempt / Experienced New Hire Policy

After reviewing the Relocation Policy, please contact the Phillips 66 Relocation Center at (800) 267-7573 for any questions you may have or to begin your relocation process once you have accepted the offer and been cleared to hire. The Phillips 66 Relocation Center will be your resource for any questions you may have about the policy prior to offer acceptance and during the relocation process. Also, please note that the Phillips 66 Relocation Center must be contacted prior to initiating any action related to Home Sale and House Hunting/Home Purchase.

Executive Benefits

You will be eligible for the following executive benefits:

Executive Health Program – designed to promote and protect your health. This program is a complete personal wellness assessment at Houston Methodist focused on identifying potential health risks and developing steps to prevent future health issues.

Executive Financial Counseling – designed to help you meet your future financial goals. Provided by The Ayco Company, L.P., a Goldman Sachs Company, will help you create a long‐range financial strategy to address financial and tax issues facing you and your family. Ayco’s counselors are well versed in our benefits and compensation plans and will assist with Benefits and Compensation Planning, Estate Planning, Investment Planning, Income Tax Planning and Preparation, Risk Management and Long‐Term Cash Flow/Retirement Planning. This service is fully paid for by Phillips 66, however, you will be responsible for the taxes on the imputed earnings of this benefit should you chose to accept it.

Employee Benefits

You will be eligible to participate in the various Phillips 66 employee benefit plans. Please visit our new hire benefits website to explore highlights of our benefits.

Requirements for Employment

This offer is contingent upon your successful completion of certain Pre-Placement Requirements and Employment Eligibility Verification. Failure to successfully complete or meet these requirements in the necessary timeframes may prevent you from being placed in or continuing to remain in your position.

Pre-Placement Requirements: After you have accepted our offer, you will receive several emails addressing each specific Pre-Placement Requirement, including the Pre-Placement Medical Questionnaire, Background Check and Standard Drug Test for prohibited substances. As mentioned above, this offer is contingent upon your successful completion of the Pre-Placement Requirements.

Employment Eligibility Verification: Under the provisions of the Immigration Reform and Control Act of 1986, your employer is required to have verification indicating you are authorized to work in the United States. You will be required to provide employment eligibility verification documents within three working days after the start of employment. Click on the following link for more information about Employment Eligibility Verification.

If you have any further questions concerning this offer, please contact Sonya Reed at 832-765-1341 or via e-mail at sonya.m.reed@p66.com. We would like to have your formal reply as soon as possible. We are very interested in you becoming a part of our team and have confidence that you can make significant contributions to our business objectives.

Sincerely,

Greg Garland

cc: Sonya Reed

Please sign below acknowledging your acceptance of employment with Phillips 66.

______________________________________________

_____________________

Date

EX-22

Exhibit 22

LIST OF GUARANTOR SUBSIDIARIES

As of March 31, 2023, Phillips 66 Company, a corporation incorporated under the laws of the State of Delaware (the “Guarantor Subsidiary”), has guaranteed each of the senior unsecured debt securities issued by Phillips 66 listed below. Phillips 66 directly owns 100% of the Guarantor Subsidiary. The guarantees (1) are unsecured obligations of the Guarantor Subsidiary, (2) rank equally with all of its other unsecured and unsubordinated indebtedness, and (3) are full and unconditional and joint and several.

Senior Unsecured Debt Securities of Phillips 66 Guaranteed by the Guarantor Subsidiary

•0.900% Senior Notes due February 2024

•3.850% Senior Notes due April 2025

•1.300% Senior Notes due February 2026

•3.900% Senior Notes due March 2028

•2.150% Senior Notes due December 2030

•4.650% Senior Notes due November 2034

•5.875% Senior Notes due May 2042

•4.875% Senior Notes due November 2044

•3.300% Senior Notes due March 2052

As of March 31, 2023, Phillips 66 has guaranteed each of the senior unsecured debt securities issued by Phillips 66 Company listed below. The guarantees (1) are unsecured obligations of Phillips 66, (2) rank equally with all of its other unsecured and unsubordinated indebtedness, and (3) are full and unconditional and joint and several.

Senior Unsecured Debt Securities of Phillips 66 Company Guaranteed by Phillips 66

•2.450% Senior Notes due December 2024

•3.605% Senior Notes due February 2025

•3.550% Senior Notes due October 2026

•4.950% Senior Notes due December 2027

•3.750% Senior Notes due March 2028

•3.150% Senior Notes due December 2029

•5.300% Senior Notes due June 2033

•4.680% Senior Notes due February 2045

•4.900% Senior Notes due October 2046

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Mark E. Lashier, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Phillips 66;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023

/s/ Mark E. Lashier

Mark E. Lashier

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kevin J. Mitchell, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Phillips 66;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023  

/s/ Kevin J. Mitchell

Kevin J. Mitchell

Executive Vice President and
Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Phillips 66 (the Company) on Form 10-Q for the period ended March 31, 2023, as filed with the U.S. Securities and Exchange Commission on the date hereof (the Report), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

(1)The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2023

/s/ Mark E. Lashier

Mark E. Lashier

President and Chief Executive Officer

/s/ Kevin J. Mitchell

Kevin J. Mitchell

Executive Vice President and
Chief Financial Officer

XML

Cover	3 Months Ended
	Mar. 31, 2023 shares
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-35349
Entity Registrant Name	Phillips 66
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-3779385
Entity Address, Address Line One	2331 CityWest Blvd
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77042
City Area Code	832
Local Phone Number	765-3010
Title of 12(b) Security	Common Stock, $0.01 Par Value
Trading Symbol	PSX
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	458,862,316
Entity Central Index Key	0001534701
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Statement of Income - USD ($) shares in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues and Other Income
Sales and other operating revenues	$ 34,396	$ 36,179
Equity in earnings of affiliates	611	685
Net gain on dispositions	34	1
Other income (loss)	48	(143)
Total Revenues and Other Income	35,089	36,722
Costs and Expenses
Purchased crude oil and products	29,341	33,495
Operating expenses	1,578	1,340
Selling, general and administrative expenses	605	433
Depreciation and amortization	476	338
Impairments	8	0
Taxes other than income taxes	207	149
Accretion on discounted liabilities	6	6
Interest and debt expense	192	135
Foreign currency transaction (gains) losses	25	(2)
Total Costs and Expenses	32,438	35,894
Income before income taxes	2,651	828
Income tax expense	574	171
Net Income	2,077	657
Less: net income attributable to noncontrolling interests	116	75
Net Income Attributable to Phillips 66	$ 1,961	$ 582
Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
Basic (in usd per share)	$ 4.21	$ 1.29
Diluted (in usd per share)	$ 4.20	$ 1.29
Weighted-Average Common Shares Outstanding (thousands)
Basic (in shares)	464,810	449,298
Diluted (in shares)	467,034	450,011

XML

Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net Income	$ 2,077	$ 657
Defined benefit plans
Amortization of net actuarial loss, prior service credit and settlements	10	11
Plans sponsored by equity affiliates	3	5
Income taxes on defined benefit plans	(3)	(3)
Defined benefit plans, net of income taxes	10	13
Foreign currency translation adjustments	76	(82)
Income taxes on foreign currency translation adjustments	1	0
Foreign currency translation adjustments, net of income taxes	77	(82)
Income taxes on hedging activities	0	0
Hedging activities, net of income taxes	0	0
Other Comprehensive Income (Loss), Net of Income Taxes	87	(69)
Comprehensive Income	2,164	588
Less: comprehensive income attributable to noncontrolling interests	116	75
Comprehensive Income Attributable to Phillips 66	$ 2,048	$ 513

XML

Consolidated Balance Sheet - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Assets
Cash and cash equivalents	$ 6,965	$ 6,133
Accounts and notes receivable (net of allowances of $67 million in 2023 and 2022)	8,123	9,497
Accounts and notes receivable—related parties	1,203	1,488
Inventories	5,445	3,276
Prepaid expenses and other current assets	934	1,528
Total Current Assets	22,670	21,922
Investments and long-term receivables	15,289	14,950
Net properties, plants and equipment	35,111	35,163
Goodwill	1,486	1,486
Intangibles	793	831
Other assets	1,913	2,090
Total Assets	77,262	76,442
Liabilities
Accounts payable	9,923	10,748
Accounts payable—related parties	646	575
Short-term debt	825	529
Accrued income and other taxes	1,388	1,397
Employee benefit obligations	436	764
Other accruals	1,487	1,876
Total Current Liabilities	14,705	15,889
Long-term debt	17,660	16,661
Asset retirement obligations and accrued environmental costs	872	879
Deferred income taxes	6,813	6,671
Employee benefit obligations	931	937
Other liabilities and deferred credits	1,365	1,299
Total Liabilities	42,346	42,336
Equity
Common stock, value	7	7
Capital in excess of par	19,795	19,791
Treasury stock (at cost: 2023—194,403,868 shares; 2022—186,529,667 shares)	(16,083)	(15,276)
Retained earnings	26,903	25,432
Accumulated other comprehensive loss	(373)	(460)
Total Stockholders’ Equity	30,249	29,494
Noncontrolling interests	4,667	4,612
Total Equity	34,916	34,106
Total Liabilities and Equity	$ 77,262	$ 76,442

XML

Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for credit losses	$ 67	$ 67
Common stock authorized (in shares)	2,500,000,000	2,500,000,000
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock issued (in shares)	653,266,184	652,373,645
Treasury stock (in shares)	194,403,868	186,529,667

XML

Consolidated Statement of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows From Operating Activities
Net income	$ 2,077	$ 657
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	476	338
Impairments	8	0
Accretion on discounted liabilities	6	6
Deferred income taxes	146	142
Undistributed equity earnings	(242)	(100)
Net gain on dispositions	(34)	(1)
Unrealized investment loss	11	169
Other	14	40
Working capital adjustments
Accounts and notes receivable	1,663	(3,042)
Inventories	(2,003)	(1,152)
Prepaid expenses and other current assets	469	(849)
Accounts payable	(739)	4,809
Taxes and other accruals	(653)	119
Net Cash Provided by Operating Activities	1,199	1,136
Cash Flows From Investing Activities
Capital expenditures and investments	(378)	(370)
Return of investments in equity affiliates	60	15
Proceeds from asset dispositions	77	1
Other	(24)	(74)
Net Cash Used in Investing Activities	(265)	(428)
Cash Flows From Financing Activities
Issuance of debt	2,488	0
Repayment of debt	(1,223)	(24)
Issuance of common stock	10	23
Repurchase of common stock	(800)	0
Dividends paid on common stock	(486)	(404)
Distributions to noncontrolling interests	(58)	(77)
Other	(48)	(30)
Net Cash Used in Financing Activities	(117)	(512)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	15	(8)
Net Change in Cash and Cash Equivalents	832	188
Cash and cash equivalents at beginning of period	6,133	3,147
Cash and Cash Equivalents at End of Period	$ 6,965	$ 3,335

XML

Consolidated Statement of Changes in Equity - USD ($) $ in Millions	Total	Par Value	Capital in Excess of Par	Treasury Stock	Retained Earnings	Accum. Other Comprehensive Loss	Noncontrolling Interests
Beginning balance at Dec. 31, 2021	$ 21,637	$ 7	$ 20,504	$ (17,116)	$ 16,216	$ (445)	$ 2,471
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	657				582		75
Other comprehensive income (loss)	(69)					(69)
Dividends paid on common stock	(404)				(404)
Benefit plan activity	29		32		(3)
Distributions to noncontrolling interests	(77)						(77)
Acquisition of noncontrolling interest in Phillips 66 Partners LP	348		(869)	3,380			(2,163)
Ending balance at Mar. 31, 2022	$ 22,121	7	19,667	(13,736)	16,391	(514)	306
Beginning balance, common stock issued (in shares) at Dec. 31, 2021	650,026,318
Beginning balance, treasury stock (in shares) at Dec. 31, 2021	211,771,827
Stockholders' Equity, Shares [Roll Forward]
Shares issued - share-based compensation (in shares)	1,020,299
Shares issued—acquisition of noncontrolling interest in Phillips 66 Partners LP (in shares)	(41,825,236)
Ending balance, common stock issued (in shares) at Mar. 31, 2022	651,046,617
Ending balance, treasury stock (in shares) at Mar. 31, 2022	169,946,591
Beginning balance at Dec. 31, 2022	$ 34,106	7	19,791	(15,276)	25,432	(460)	4,612
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,077				1,961		116
Other comprehensive income (loss)	87					87
Dividends paid on common stock	(486)				(486)
Repurchase of common stock	(807)			(807)
Benefit plan activity	(3)		4		(4)		(3)
Distributions to noncontrolling interests	(58)						(58)
Ending balance at Mar. 31, 2023	$ 34,916	$ 7	$ 19,795	$ (16,083)	$ 26,903	$ (373)	$ 4,667
Beginning balance, common stock issued (in shares) at Dec. 31, 2022	652,373,645
Beginning balance, treasury stock (in shares) at Dec. 31, 2022	186,529,667
Stockholders' Equity, Shares [Roll Forward]
Repurchase of common stock (in shares)	7,874,201
Shares issued - share-based compensation (in shares)	892,539
Ending balance, common stock issued (in shares) at Mar. 31, 2023	653,266,184
Ending balance, treasury stock (in shares) at Mar. 31, 2023	194,403,868

XML

Consolidated Statement of Changes in Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Dividends paid per common stock (in usd per share)	$ 1.05	$ 0.92

XML

Interim Financial Information	3 Months Ended
	Mar. 31, 2023
Interim Financial Information [Abstract]
Interim Financial Information	Interim Financial InformationThe unaudited interim financial information presented in the financial statements included in this report is prepared in accordance with generally accepted accounting principles in the United States (GAAP) and includes all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of the consolidated financial position of Phillips 66 and its results of operations and cash flows for the periods presented. Unless otherwise specified, all such adjustments are of a normal and recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our 2022 Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the results expected for the full year.

XML

Change in Accounting Principle	3 Months Ended
	Mar. 31, 2023
Accounting Changes and Error Corrections [Abstract]
Change in Accounting Principle	Change in Accounting PrincipleEffective January 1, 2023, we adopted ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. At the time of adoption, this ASU did not have a material impact on our consolidated financial statements.

XML

DCP Midstream, LLC and Gray Oak Holdings LLC Merger

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

DCP Midstream, LLC and Gray Oak Holdings LLC Merger

DCP Midstream, LLC and Gray Oak Holdings LLC Merger

On August 17, 2022, we and our co-venturer, Enbridge Inc. (Enbridge), agreed to merge DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings), with DCP Midstream as the surviving entity.

Prior to the merger, we and Enbridge each held a 50% interest and jointly governed DCP Midstream, whose primary assets are its general partner and limited partner interests in DCP Midstream, LP (DCP LP), and we each held indirect economic interests in DCP LP of 28.26%. DCP LP is a variable interest entity (VIE) because its limited partners do not have the ability to remove its general partner with a simple majority vote, nor do its limited partners have substantive participating rights in the significant decisions made in the ordinary course of business. DCP Midstream ultimately consolidates DCP LP because one of its wholly owned subsidiaries is the primary beneficiary of DCP LP.

We and Enbridge also held 65% and 35% interests, respectively, in Gray Oak Holdings, whose primary asset was a 65% noncontrolling interest in Gray Oak Pipeline, LLC (Gray Oak Pipeline). Our and Enbridge’s indirect economic interests in Gray Oak Pipeline were 42.25% and 22.75%, respectively. We had voting control over and consolidated Gray Oak Holdings and reported Gray Oak Holdings’ 65% interest in Gray Oak Pipeline as an equity investment and Enbridge’s interest in Gray Oak Holdings as a noncontrolling interest.

In connection with the merger, we and Enbridge entered into a Third Amended and Restated Limited Liability Company Agreement of DCP Midstream (Amended and Restated LLC Agreement), which realigned the members’ economic interests and governance responsibilities. Under the Amended and Restated LLC Agreement, two classes of membership interests in DCP Midstream were created, Class A and Class B, that are intended to track the assets, liabilities, revenues and expenses of the following operating segments of DCP Midstream:

•Class A Segment comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities (DCP Midstream Class A Segment).

•Class B Segment comprised of the business, activities, assets and liabilities of Gray Oak Pipeline (DCP Midstream Class B Segment).

We hold a 76.64% Class A membership interest, which represents an indirect economic interest in DCP LP of 43.3%, and a 10% Class B membership interest, which represents an indirect economic interest in Gray Oak Pipeline of 6.5%. Enbridge holds the remaining Class A and Class B membership interests. We have been designated as the managing member of DCP Midstream Class A Segment and are responsible for conducting, directing and managing all activities associated with this segment, except as limited in certain instances. Enbridge has been designated as the managing member of DCP Midstream Class B Segment. Earnings and distributions from each segment are allocated to the members based on their membership interest in each membership class, except as otherwise provided.

DCP Midstream Class A Segment and DCP Midstream Class B Segment were determined to be silos under the variable interest consolidation model. As a result, DCP Midstream was also determined to be a VIE. We determined that we are the primary beneficiary of DCP Midstream Class A Segment because of the governance rights granted to us under the Amended and Restated LLC Agreement as managing member of the segment.

We hold a 33.33% direct ownership interest in DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills). DCP LP holds the remaining 66.67% ownership interest in these entities. As a result of the governance rights granted to us over DCP Midstream Class A Segment and the governance rights we hold through our direct ownership interests, we obtained controlling financial interests in these entities in connection with the merger. As a result, our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased to 62.2% from 52.2%.

Starting on August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. We also began reporting the direct and indirect economic interests held by Enbridge, DCP LP’s public common unitholders and DCP LP’s preferred unitholders as noncontrolling interests on our financial statements.

We account for our remaining indirect economic interest in Gray Oak Pipeline, now held through DCP Midstream Class B Segment, using the equity method of accounting. As a result of the merger, we derecognized Enbridge’s noncontrolling interest in Gray Oak Holdings.

We accounted for our consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills as a business combination using the acquisition method of accounting. See Note 4—Business Combinations, for additional information on our accounting for this transaction. See Note 21—DCP Midstream Class A Segment, for additional information regarding our variable interest in DCP Midstream Class A Segment and the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.Business Combinations

On August 17, 2022, we realigned our economic interest in, and governance rights over, DCP Midstream and Gray Oak Holdings through the merger of these existing entities with DCP Midstream as the surviving entity. As part of the merger, we transferred a 35.75% indirect economic interest in Gray Oak Pipeline and contributed $404 million of cash to DCP Midstream, which was then paid to Enbridge, in return for a 15.05% incremental indirect economic ownership interest in DCP LP. As noted above, the additional governance rights we were granted as part of this transaction resulted in us consolidating the DCP Midstream Class A Segment, as well as DCP Sand Hills and DCP Southern Hills. Given the nature of this transaction, we have accounted for the consolidation of these entities using the acquisition method of accounting.

The components of the fair value of the merger consideration are:

	Millions of Dollars
Cash contributed	$	404
Fair value of transferred equity interest	634
Fair value of previously held equity interests	3,853
Total merger consideration	$	4,891

The aggregate purchase consideration noted above was allocated to the assets acquired and liabilities assumed of the entities consolidated based upon a preliminary estimate of their fair values as of the August 17, 2022, merger date. Due to the level of effort required to develop fair value measurements, the valuation information necessary to determine the fair values of assets acquired and liabilities assumed is preliminary, including the underlying cash flows, appraisals and other information used to estimate the fair values of the net assets acquired and noncontrolling interests in those net assets. We continue to evaluate the factors used in establishing the fair values of assets and liabilities as of the acquisition date, including, but not limited to, those factors that could affect the estimated fair values of properties, plants and equipment (PP&E), investments in unconsolidated affiliates accounted for under the equity method, inventories, identifiable intangible assets, leases, financial instruments, asset retirement and environmental obligations, legal and tax contingencies, debt and noncontrolling interests. We will complete a final determination of the fair values of assets acquired and liabilities assumed within the one-year measurement period from the date of the merger. Any adjustments made in subsequent periods could be material to the preliminary values.

The following table shows the preliminary purchase price allocation as of the date of the merger, and cumulative adjustments we have made as of March 31, 2023:

	Millions of Dollars
	As Originally Reported		Adjustments	As Adjusted
Fair value of assets acquired:
Cash and cash equivalents	$	98	—	98
Accounts and notes receivable	1,003		—	1,003
Inventories	74		166	240
Prepaid expenses and other current assets	439		—	439
Investments and long-term receivables	2,192		57	2,249
Properties, plants and equipment	12,837		13	12,850
Intangibles	36		(36)	—
Other assets	343		(158)	185
Total assets acquired	17,022		42	17,064
Fair value of liabilities assumed:
Accounts payable	912		—	912
Short-term debt	625		(2)	623
Accrued income and other taxes	107		(11)	96
Employee benefit obligation—current	50		22	72
Other accruals	497		(21)	476
Long-term debt	4,541		40	4,581
Asset retirement obligations and accrued environmental costs	168		16	184
Deferred income taxes	40		14	54
Employee benefit obligations	54		—	54
Other liabilities and deferred credits	227		(5)	222
Total liabilities assumed	7,221		53	7,274
Fair value of net assets	9,801		(11)	9,790
Less: Fair value of noncontrolling interests	4,910		(11)	4,899
Total merger consideration	$	4,891	—	4,891

The adjustments reflected in the table above include reclassification adjustments we have made to the preliminary purchase price allocation to conform with our historical presentation and adjustments we have made to the estimated fair value of certain assets acquired and liabilities assumed. The adjustments recorded in the three months ended March 31, 2023, were not material.

Pending Acquisition

On April 10, 2023, we entered into an agreement to acquire certain marketing assets on the U.S. West Coast for cash consideration of approximately $260 million plus an adjustment for net working capital that will be determined at closing. The transaction is expected to close in the second or early third quarter of 2023, subject to regulatory approval and completion of other customary closing conditions.

XML

Business Combinations

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Business Combinations

DCP Midstream, LLC and Gray Oak Holdings LLC Merger

On August 17, 2022, we and our co-venturer, Enbridge Inc. (Enbridge), agreed to merge DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings), with DCP Midstream as the surviving entity.

Prior to the merger, we and Enbridge each held a 50% interest and jointly governed DCP Midstream, whose primary assets are its general partner and limited partner interests in DCP Midstream, LP (DCP LP), and we each held indirect economic interests in DCP LP of 28.26%. DCP LP is a variable interest entity (VIE) because its limited partners do not have the ability to remove its general partner with a simple majority vote, nor do its limited partners have substantive participating rights in the significant decisions made in the ordinary course of business. DCP Midstream ultimately consolidates DCP LP because one of its wholly owned subsidiaries is the primary beneficiary of DCP LP.

We and Enbridge also held 65% and 35% interests, respectively, in Gray Oak Holdings, whose primary asset was a 65% noncontrolling interest in Gray Oak Pipeline, LLC (Gray Oak Pipeline). Our and Enbridge’s indirect economic interests in Gray Oak Pipeline were 42.25% and 22.75%, respectively. We had voting control over and consolidated Gray Oak Holdings and reported Gray Oak Holdings’ 65% interest in Gray Oak Pipeline as an equity investment and Enbridge’s interest in Gray Oak Holdings as a noncontrolling interest.

In connection with the merger, we and Enbridge entered into a Third Amended and Restated Limited Liability Company Agreement of DCP Midstream (Amended and Restated LLC Agreement), which realigned the members’ economic interests and governance responsibilities. Under the Amended and Restated LLC Agreement, two classes of membership interests in DCP Midstream were created, Class A and Class B, that are intended to track the assets, liabilities, revenues and expenses of the following operating segments of DCP Midstream:

•Class A Segment comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities (DCP Midstream Class A Segment).

•Class B Segment comprised of the business, activities, assets and liabilities of Gray Oak Pipeline (DCP Midstream Class B Segment).

We hold a 76.64% Class A membership interest, which represents an indirect economic interest in DCP LP of 43.3%, and a 10% Class B membership interest, which represents an indirect economic interest in Gray Oak Pipeline of 6.5%. Enbridge holds the remaining Class A and Class B membership interests. We have been designated as the managing member of DCP Midstream Class A Segment and are responsible for conducting, directing and managing all activities associated with this segment, except as limited in certain instances. Enbridge has been designated as the managing member of DCP Midstream Class B Segment. Earnings and distributions from each segment are allocated to the members based on their membership interest in each membership class, except as otherwise provided.

DCP Midstream Class A Segment and DCP Midstream Class B Segment were determined to be silos under the variable interest consolidation model. As a result, DCP Midstream was also determined to be a VIE. We determined that we are the primary beneficiary of DCP Midstream Class A Segment because of the governance rights granted to us under the Amended and Restated LLC Agreement as managing member of the segment.

We hold a 33.33% direct ownership interest in DCP Sand Hills Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills). DCP LP holds the remaining 66.67% ownership interest in these entities. As a result of the governance rights granted to us over DCP Midstream Class A Segment and the governance rights we hold through our direct ownership interests, we obtained controlling financial interests in these entities in connection with the merger. As a result, our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased to 62.2% from 52.2%.

Starting on August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. We also began reporting the direct and indirect economic interests held by Enbridge, DCP LP’s public common unitholders and DCP LP’s preferred unitholders as noncontrolling interests on our financial statements.

We account for our remaining indirect economic interest in Gray Oak Pipeline, now held through DCP Midstream Class B Segment, using the equity method of accounting. As a result of the merger, we derecognized Enbridge’s noncontrolling interest in Gray Oak Holdings.

We accounted for our consolidation of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills as a business combination using the acquisition method of accounting. See Note 4—Business Combinations, for additional information on our accounting for this transaction. See Note 21—DCP Midstream Class A Segment, for additional information regarding our variable interest in DCP Midstream Class A Segment and the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.Business Combinations

On August 17, 2022, we realigned our economic interest in, and governance rights over, DCP Midstream and Gray Oak Holdings through the merger of these existing entities with DCP Midstream as the surviving entity. As part of the merger, we transferred a 35.75% indirect economic interest in Gray Oak Pipeline and contributed $404 million of cash to DCP Midstream, which was then paid to Enbridge, in return for a 15.05% incremental indirect economic ownership interest in DCP LP. As noted above, the additional governance rights we were granted as part of this transaction resulted in us consolidating the DCP Midstream Class A Segment, as well as DCP Sand Hills and DCP Southern Hills. Given the nature of this transaction, we have accounted for the consolidation of these entities using the acquisition method of accounting.

The components of the fair value of the merger consideration are:

	Millions of Dollars
Cash contributed	$	404
Fair value of transferred equity interest	634
Fair value of previously held equity interests	3,853
Total merger consideration	$	4,891

The aggregate purchase consideration noted above was allocated to the assets acquired and liabilities assumed of the entities consolidated based upon a preliminary estimate of their fair values as of the August 17, 2022, merger date. Due to the level of effort required to develop fair value measurements, the valuation information necessary to determine the fair values of assets acquired and liabilities assumed is preliminary, including the underlying cash flows, appraisals and other information used to estimate the fair values of the net assets acquired and noncontrolling interests in those net assets. We continue to evaluate the factors used in establishing the fair values of assets and liabilities as of the acquisition date, including, but not limited to, those factors that could affect the estimated fair values of properties, plants and equipment (PP&E), investments in unconsolidated affiliates accounted for under the equity method, inventories, identifiable intangible assets, leases, financial instruments, asset retirement and environmental obligations, legal and tax contingencies, debt and noncontrolling interests. We will complete a final determination of the fair values of assets acquired and liabilities assumed within the one-year measurement period from the date of the merger. Any adjustments made in subsequent periods could be material to the preliminary values.

The following table shows the preliminary purchase price allocation as of the date of the merger, and cumulative adjustments we have made as of March 31, 2023:

	Millions of Dollars
	As Originally Reported		Adjustments	As Adjusted
Fair value of assets acquired:
Cash and cash equivalents	$	98	—	98
Accounts and notes receivable	1,003		—	1,003
Inventories	74		166	240
Prepaid expenses and other current assets	439		—	439
Investments and long-term receivables	2,192		57	2,249
Properties, plants and equipment	12,837		13	12,850
Intangibles	36		(36)	—
Other assets	343		(158)	185
Total assets acquired	17,022		42	17,064
Fair value of liabilities assumed:
Accounts payable	912		—	912
Short-term debt	625		(2)	623
Accrued income and other taxes	107		(11)	96
Employee benefit obligation—current	50		22	72
Other accruals	497		(21)	476
Long-term debt	4,541		40	4,581
Asset retirement obligations and accrued environmental costs	168		16	184
Deferred income taxes	40		14	54
Employee benefit obligations	54		—	54
Other liabilities and deferred credits	227		(5)	222
Total liabilities assumed	7,221		53	7,274
Fair value of net assets	9,801		(11)	9,790
Less: Fair value of noncontrolling interests	4,910		(11)	4,899
Total merger consideration	$	4,891	—	4,891

The adjustments reflected in the table above include reclassification adjustments we have made to the preliminary purchase price allocation to conform with our historical presentation and adjustments we have made to the estimated fair value of certain assets acquired and liabilities assumed. The adjustments recorded in the three months ended March 31, 2023, were not material.

Pending Acquisition

On April 10, 2023, we entered into an agreement to acquire certain marketing assets on the U.S. West Coast for cash consideration of approximately $260 million plus an adjustment for net working capital that will be determined at closing. The transaction is expected to close in the second or early third quarter of 2023, subject to regulatory approval and completion of other customary closing conditions.

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Sales and Other Operating Revenues

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Sales and Other Operating Revenues

Sales and Other Operating Revenues

Disaggregated Revenues

The following tables present our disaggregated sales and other operating revenues:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Product Line and Services
Refined petroleum products	$	24,718	29,382
Crude oil resales	4,565		3,755
Natural gas liquids (NGL) and natural gas	4,421		3,230
Services and other*	692		(188)
Consolidated sales and other operating revenues	$	34,396	36,179
Geographic Location**
United States	$	27,065	28,885
United Kingdom	3,930		3,640
Germany	1,306		1,382
Other countries	2,095		2,272
Consolidated sales and other operating revenues	$	34,396	36,179
* Includes derivatives-related activities. See Note 14—Derivatives and Financial Instruments, for additional information.
** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues.

Contract-Related Assets and Liabilities

At March 31, 2023, and December 31, 2022, receivables from contracts with customers were $7,317 million and $8,749 million, respectively. Significant noncustomer balances, such as buy/sell receivables and excise tax receivables, were excluded from these amounts.

Our contract-related assets also include payments we make to our marketing customers related to incentive programs. An incentive payment is initially recognized as an asset and subsequently amortized as a reduction to revenue over the contract term, which generally ranges from 5 to 15 years. At March 31, 2023, and December 31, 2022, our asset balances related to such payments were $509 million and $505 million, respectively.

Our contract liabilities represent advances from our customers prior to product or service delivery. At March 31, 2023, and December 31, 2022, contract liabilities were $203 million and $156 million, respectively.

Remaining Performance Obligations

Most of our contracts with customers are spot contracts or term contracts with only variable consideration. We do not disclose remaining performance obligations for these contracts as the expected duration is one year or less or because the variable consideration has been allocated entirely to an unsatisfied performance obligation. We also have certain contracts in our Midstream segment that include minimum volume commitments with fixed pricing. At March 31, 2023, the remaining performance obligations related to these minimum volume commitment contracts amounted to $446 million. This amount excludes variable consideration and estimates of variable rate escalation clauses in our contracts with customers, and is expected to be recognized through 2031 with a weighted average remaining life of three years as of March 31, 2023.

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Credit Losses

3 Months Ended

Mar. 31, 2023

Credit Loss [Abstract]

Credit Losses

Credit Losses

We are exposed to credit losses primarily through our sales of refined petroleum products, crude oil, NGL and natural gas. We assess each counterparty’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the counterparty’s established credit rating or our assessment of the counterparty’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risk, and business strategy in our evaluation. A credit limit is established for each counterparty based on the outcome of this review. We may require collateralized asset support or a prepayment to mitigate credit risk.

We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities include timely account reconciliations, dispute resolution and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. In addition, when events and circumstances arise that may affect certain counterparties’ abilities to fulfill their obligations, we enhance our credit monitoring, and we may seek collateral to support some transactions or require prepayments from higher-risk counterparties.

At March 31, 2023, and December 31, 2022, we reported $9,326 million and $10,985 million of accounts and notes receivable, respectively, net of allowances of $67 million for both periods. Based on an aging analysis at March 31, 2023, more than 95% of our accounts receivable were outstanding less than 60 days.

We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt and standby letters of credit. See Note 12—Guarantees, and Note 13—Contingencies and Commitments, for more information on these off-balance sheet exposures.

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Inventories

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following:

	Millions of Dollars
	March 31 2023		December 31 2022
Crude oil and petroleum products	$	5,046	2,914
Materials and supplies	399		362
	$	5,445	3,276

Inventories valued on the last-in, first-out (LIFO) basis totaled $4,837 million and $2,635 million at March 31, 2023, and December 31, 2022, respectively. The estimated excess of current replacement cost over LIFO cost of inventories amounted to approximately $6 billion and $6.3 billion at March 31, 2023, and December 31, 2022, respectively.

Certain planned reductions in inventory that are not expected to be replaced by the end of the year cause liquidations of LIFO inventory values. LIFO inventory liquidations increased our net income by $4 million and $40 million in the three months ended March 31, 2023 and 2022

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Investments, Loans and Long-Term Receivables

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Investments, Loans and Long-Term Receivables

Investments, Loans and Long-Term Receivables

Equity Investments

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

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 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 Court) denied Dakota Access’ writ of certiorari requesting the Court to review the lower court’s decision to order the EIS and vacate the easement. Therefore, the requirement to prepare the EIS stands. 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 release is expected in the second quarter of 2023.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access in March 2019. On April 1, 2022, Dakota Access’ wholly owned subsidiary repaid $650 million aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25% share, or $163 million, with a capital contribution of $89 million in March 2022 and $74 million of distributions we elected not to receive from Dakota Access in the first quarter of 2022. At March 31, 2023, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $1.85 billion.

In conjunction with the notes offering, Phillips 66 Partners LP (Phillips 66 Partners), now a wholly owned subsidiary of Phillips 66, and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU). Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation. At March 31, 2023, our 25% share of the maximum potential equity contributions under the CECU was approximately $467 million.

If the pipeline is required to cease operations, and should Dakota Access and ETCO not have sufficient funds to pay ongoing expenses, we could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $20 million annually, in addition to the potential obligations under the CECU at March 31, 2023.

At March 31, 2023, the aggregate book value of our investments in Dakota Access and ETCO was $659 million.

CF United LLC (CF United)

We own a 50% voting interest and a 47% economic interest in CF United, a retail marketing joint venture with operations primarily on the U.S. West Coast. CF United is considered a VIE because our co-venturer has an option to require us to purchase its interest based on a fixed multiple. The put option becomes effective July 1, 2023, and expires on March 31, 2024. The put option is viewed as a variable interest as the purchase price on the exercise date may not represent the then-current fair value of CF United. We have determined that we are not the primary beneficiary because we and our co-venturer jointly direct the activities of CF United that most significantly impact economic performance. At March 31, 2023, our maximum exposure to loss was comprised of our $292 million investment in CF United, and any potential future loss resulting from the put option should the purchase price based on a fixed multiple exceed the then-current fair value of CF United.

OnCue Holdings, LLC (OnCue)

We hold a 50% interest in OnCue, a joint venture that owns and operates retail convenience stores. We fully guaranteed various debt agreements of OnCue and our co-venturer did not participate in the guarantees. This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses. We have determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance. At March 31, 2023, our maximum exposure to loss was $213 million, which represented the book value of our investment in OnCue of $145 million and guaranteed debt obligations of $68 million.

DCP Midstream, DCP Sand Hills, DCP Southern Hills, and Gray Oak Pipeline—Prior to the merger of DCP Midstream and Gray Oak Holdings on August 17, 2022, we held:

•A 50% interest in DCP Midstream a joint venture that owns and operates NGL and gas pipelines, gas plants, gathering systems, storage facilities and fractionation plants, through its subsidiary DCP LP.

•A 33.33% direct ownership interest in DCP Sand Hills a joint venture that owns a NGL pipeline system that extends from the Permian Basin and Eagle Ford to facilities on the Texas Gulf Coast and to the Mont Belvieu, Texas, market hub.

•A 33.33% direct ownership interest in DCP Southern Hills a joint venture that owns a NGL pipeline system that extends from the Midcontinent region to the Mont Belvieu, Texas, market hub.

•A 65% interest in Gray Oak Pipeline, which was held through a consolidated holding company, Gray Oak Holdings. Our indirect interest in Gray Oak Pipeline was 42.25%, after considering a co-venturer’s 35% interest in Gray Oak Holdings. Gray Oak Pipeline is a crude oil pipeline that extends from the Permian and Eagle Ford to Texas Gulf Coast destinations that include Corpus Christi, Texas, and the Sweeny area, including our Sweeny Refinery.

Other Investments

In September 2021, we acquired 78 million ordinary shares, representing a 16% ownership interest, in NOVONIX Limited (NOVONIX), which are traded on the Australian Securities Exchange. NOVONIX is a Brisbane, Australia-based company that develops technology and supplies materials for lithium-ion batteries. Since we do not have significant influence over the operating and financial policies of NOVONIX and the shares we own have a readily determinable fair value, our investment is recorded at fair value at the end of each reporting period. The fair value of our investment is recorded in the “Investments and long-term receivables” line item on our consolidated balance sheet. The change in the fair value of our investment due to fluctuations in NOVONIX’s stock price, or unrealized investment losses, is recorded in the “Other income (loss)” line item of our consolidated statement of income, while changes due to foreign currency fluctuations are recorded in the “Foreign currency transaction (gains) losses” line item on our consolidated statement of income. The fair value of our investment in NOVONIX was $66 million at March 31, 2023. The fair value of our investment in NOVONIX declined by $12 million during the three months ended March 31, 2023, reflecting an unrealized investment loss of $11 million and an unrealized foreign currency loss of $1 million. See Note 15—Fair Value Measurements, for additional information regarding the recurring fair value measurement of our investment in NOVONIX.

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Properties, Plants and Equipment

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Properties, Plants and Equipment

Properties, Plants and Equipment

Our gross investment in PP&E and the associated accumulated depreciation and amortization (Accum. D&A) balances were as follows:

	Millions of Dollars
	March 31, 2023				December 31, 2022
	Gross PP&E		Accum. D&A	Net PP&E	Gross PP&E	Accum. D&A	Net PP&E
Midstream	$	25,549	3,743	21,806	25,422	3,524	21,898
Chemicals	—		—	—	—	—	—
Refining	24,236		12,500	11,736	24,200	12,523	11,677
Marketing and Specialties	1,829		1,095	734	1,800	1,058	742
Corporate and Other	1,580		745	835	1,568	722	846
	$	53,194	18,083	35,111	52,990	17,827	35,163

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Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, adjusted for noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.

	Three Months Ended March 31
	2023			2022
	Basic		Diluted	Basic	Diluted
Amounts Attributed to Phillips 66 Common Stockholders (millions):
Net Income Attributable to Phillips 66	$	1,961	1,961	582	582
Income allocated to participating securities	(3)		(1)	(2)	(2)
Net income available to common stockholders	$	1,958	1,960	580	580
Weighted-average common shares outstanding (thousands):	462,870		464,810	447,206	449,298
Effect of share-based compensation	1,940		2,224	2,092	713
Weighted-average common shares outstanding—EPS	464,810		467,034	449,298	450,011
Earnings Per Share of Common Stock (dollars)	$	4.21	4.20	1.29	1.29

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Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt

Debt

Debt Issuances and Repayments

On March 29, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.25 billion aggregate principal amount of senior unsecured notes consisting of:

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

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

The 2027 Notes and 2033 Notes (collectively, the Notes) are fully and unconditionally guaranteed by Phillips 66. Interest on the 2027 Notes is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2023. Interest on the 2033 Notes is payable semi-annually on June 30 and December 30 of each year, commencing on December 30, 2023.

The Notes are required to be redeemed at a price equal to 101% of the principal amount, plus accrued and unpaid interest, at the earliest occurrence of any of the following events: the DCP LP public common unit acquisition is not completed on or prior to December 31, 2023; the agreement to acquire the DCP LP public common units is terminated; or we notify the trustee of the notes in writing that the DCP LP public common unit acquisition will not be consummated on or prior to December 31, 2023. See Note 21—DCP Midstream Class A Segment, for additional information regarding the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

On March 15, 2023, DCP LP repaid its 3.875% senior unsecured notes due March 2023 with an aggregate principal amount of $500 million using borrowings under its revolving credit and accounts receivable securitization facilities.

On April 19, 2023, DCP LP announced its intent to redeem its 5.850% junior subordinated notes due May 2043 with an aggregate principal amount outstanding of $550 million on or about May 21, 2023. DCP LP expects to use borrowings under its revolving credit and accounts receivable securitization facilities.

Term Loan Agreement

On March 27, 2023 (the Closing Date), Phillips 66 Company, a wholly owned subsidiary of Phillips 66, entered into a $1.5 billion delayed draw term loan agreement guaranteed by Phillips 66 (the Term Loan Agreement). The Term Loan Agreement provides for a single borrowing (the date of such borrowing, the Funding Date) during a 90-day period commencing on the Closing Date, contingent upon us completing the DCP LP public common unit acquisition, and matures on the third anniversary of the Funding Date. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement will bear interest at either: (a) Adjusted Term SOFR in effect from time to time plus the applicable margin; or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement. As of March 31, 2023, no borrowings are outstanding under the Term Loan Agreement.

See Note 21—DCP Midstream Class A Segment, for additional information regarding the definitive agreement we executed on January 5, 2023, to acquire an incremental interest in DCP LP.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On June 23, 2022, we entered into a $5 billion revolving credit facility with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. At both March 31, 2023, and December 31, 2022, no amount had been drawn under the $5 billion revolving credit facility or $5 billion uncommitted commercial paper program.

DCP Midstream Class A Segment

At March 31, 2023, DCP LP had $225 million of borrowings outstanding under its $1.4 billion credit facility and $2 million of letters of credit had been issued that supported the credit facility. At December 31, 2022, DCP LP had no borrowings outstanding under its $1.4 billion credit facility, and $10 million in letters of credit had been issued that are supported by the credit facility.

As of March 31, 2023, and December 31, 2022, $350 million and $40 million of borrowings, respectively, were outstanding under DCP LP’s accounts receivable securitization facility, which are secured by its accounts receivable at DCP Receivables LLC.

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Guarantees

3 Months Ended

Mar. 31, 2023

Guarantees [Abstract]

Guarantees

Guarantees

At March 31, 2023, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantees and expect future performance to be either immaterial or have only a remote chance of occurrence.

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 March 31, 2023. We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $164 million. These leases have remaining terms of five to ten years.

Guarantees of Joint Venture Obligations

In March 2019, Phillips 66 Partners and its co-venturers in Dakota Access provided a CECU in conjunction with a senior unsecured notes offering. See Note 8—Investments, Loans and Long-Term Receivables, for additional information on Dakota Access and the CECU.

At March 31, 2023, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to three years. The maximum potential future exposures under these guarantees were approximately $83 million. Payment would be required if a joint venture defaults on its obligations.

Indemnifications

Over the years, we have entered into various agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to indemnifications. Agreements associated with these sales include indemnifications for taxes, litigation, environmental liabilities, permits and licenses, employee claims, and real estate tenant defaults. The provisions of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, which generally have indefinite terms and potentially unlimited exposure. At March 31, 2023, and December 31, 2022, the carrying amount of recorded indemnifications was $134 million and $137 million, respectively.

We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information to support the reversal. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. At March 31, 2023, and December 31, 2022, environmental accruals for known contamination of $105 million and $108 million, respectively, were included in the carrying amount of the recorded indemnifications noted above. These environmental accruals were primarily included in the “Asset retirement obligations and accrued environmental costs” line item on our consolidated balance sheet. For additional information about environmental liabilities, see Note 13—Contingencies and Commitments.

Indemnification and Release Agreement

In 2012, in connection with our separation from ConocoPhillips, we entered into an Indemnification and Release Agreement. This agreement governs the treatment between ConocoPhillips and us of matters relating to indemnification, insurance, litigation responsibility and management, and litigation document sharing and cooperation arising in connection with the separation. Generally, the agreement provides for cross indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of ConocoPhillips’ business with ConocoPhillips. The agreement also establishes procedures for handling claims subject to indemnification and related matters.

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Contingencies and Commitments

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

Contingencies and Commitments

A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental

We are subject to international, federal, state and local environmental laws and regulations. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using information available at the time. We measure estimates and base contingent liabilities on currently available facts, existing technology and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring contingent environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the EPA or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

Although liability for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies alleged to have liability at a particular site. Due to such joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites for which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit, although some of the indemnifications are subject to dollar and time limits.

We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except those pertaining to sites acquired in a business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. At March 31, 2023, our total environmental accruals were $439 million, compared with $434 million at December 31, 2022. We expect to incur a substantial amount of these expenditures within the next 30 years. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

Legal Proceedings

Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases and enables the tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.

Other Contingencies

We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized.

At March 31, 2023, we had performance obligations secured by letters of credit and bank guarantees of $749 million related to various purchase and other commitments incident to the ordinary conduct of business.

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Derivatives and Financial Instruments

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Financial Instruments

Derivatives and Financial Instruments

Derivative Instruments

We use financial and commodity-based derivative contracts to manage exposures to fluctuations in commodity prices, interest rates and foreign currency exchange rates, or to capture market opportunities. Because we do not apply hedge accounting for commodity derivative contracts, all realized and unrealized gains and losses from commodity derivative contracts are recognized in our consolidated statement of income. Gains and losses from derivative contracts held for trading not directly related to our physical business are reported net in the “Other income (loss)” line item on our consolidated statement of income. Cash flows from all our derivative activity for the periods presented appear in the operating section on our consolidated statement of cash flows.

Purchase and sales contracts with firm minimum notional volumes for commodities that are readily convertible to cash are recorded on our consolidated balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception, whereby the contracts are recorded on an accrual basis. We generally apply the normal purchases and normal sales exception to eligible crude oil, refined petroleum product, NGL, natural gas, renewable feedstock, and power commodity contracts to purchase or sell quantities we expect to use or sell in the normal course of business. All other derivative instruments are recorded at fair value on our consolidated balance sheet. For further information on the fair value of derivatives, see Note 15—Fair Value Measurements.

Commodity Derivative Contracts—We sell into or receive supply from the worldwide crude oil, refined petroleum product, NGL, natural gas, renewable feedstock, and electric power markets, exposing our revenues, purchases, cost of operating activities and cash flows to fluctuations in the prices for these commodities. Generally, our policy is to remain exposed to the market prices of commodities; however, we use futures, forwards, swaps and options in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited amount of trading not directly related to our physical business, all of which may reduce our exposure to fluctuations in market prices. We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades.

DCP Midstream Class A Segment

Through DCP LP’s operations, DCP Midstream Class A Segment is exposed to a variety of risks including but not limited to changes in the prices of commodities that DCP LP buys or sells. Effective from the date of the merger, we include DCP LP’s financial instruments in our financial statements. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger, for additional information regarding the merger and the associated accounting treatment.

The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities. The balances in the following table are presented on a gross basis, before the effects of counterparty and collateral netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our consolidated balance sheet when the legal right of offset exists.

	Millions of Dollars
	March 31, 2023					December 31, 2022
	Commodity Derivatives			Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet	Commodity Derivatives		Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet
	Assets		Liabilities			Assets	Liabilities
Assets
Prepaid expenses and other current assets	$	3,008	(2,834)	(1)	173	1,331	(1,110)	—	221
Other assets	29		(4)	—	25	46	(1)	—	45
Liabilities
Other accruals	27		(144)	15	(102)	471	(750)	90	(189)
Other liabilities and deferred credits	24		(23)	—	1	12	(35)	—	(23)
Total	$	3,088	(3,005)	14	97	1,860	(1,896)	90	54

At March 31, 2023, there was $32 million of collateral paid that was not offset on our consolidated balance sheet. At December 31, 2022, there was $93 million of cash collateral paid that was not offset on our consolidated balance sheet.

The realized and unrealized gains (losses) incurred from commodity derivatives, and the line items where they appear on our consolidated statement of income, were:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Sales and other operating revenues	$	50	(420)
Other income (loss)	(14)		25
Purchased crude oil and products	137		(228)
Net gain (loss) from commodity derivative activity	$	173	(623)

The following table summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying operations. The underlying exposures may be from nonderivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward purchase and sales contracts. The percentage of our derivative contract volumes expiring within the next 12 months was more than 90% at March 31, 2023, and December 31, 2022.

	Open Position Long / (Short)
	March 31 2023	December 31 2022
Commodity
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels)	(37)	(25)
Natural gas (billions of cubic feet)	(37)	(77)

Credit Risk from Derivative and Financial Instruments

Financial instruments potentially exposed to concentrations of credit risk consist primarily of trade receivables and derivative contracts.

Our trade receivables result primarily from the sale of products from, or related to, our refinery operations and reflect a broad national and international customer base, which limits our exposure to concentrations of credit risk. The majority of these receivables have payment terms of 30 days or less. We continually monitor this exposure and the creditworthiness of the counterparties and recognize bad debt expense based on a probability assessment of credit loss. Generally, we do not require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments or master netting arrangements to mitigate credit risk with counterparties that both buy from and sell to us, as these agreements permit the amounts owed by us to others to be offset against amounts owed to us.

The credit risk from our derivative contracts, such as forwards and swaps, derives from the counterparty to the transaction. Individual counterparty exposure is managed within predetermined credit limits and includes the use of cash-call margins when appropriate, thereby reducing the risk of significant nonperformance. We also use futures, swaps and option contracts that have a negligible credit risk because these trades are cleared with an exchange clearinghouse and subject to mandatory margin requirements, typically on a daily basis, until settled.

Certain of our derivative instruments contain provisions that require us to post collateral if the derivative exposure exceeds a threshold amount. We have contracts with fixed threshold amounts and other contracts with variable threshold amounts that are contingent on our credit ratings. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if our credit ratings fall below investment grade. Cash is the primary collateral in all contracts; however, many contracts also permit us to post letters of credit as collateral.

The aggregate fair values of all derivative instruments with such credit-risk-related contingent features that were in a liability position were immaterial at March 31, 2023, and December 31, 2022.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Recurring Fair Value Measurements

We carry certain assets and liabilities at fair value, which we measure at the reporting date using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:

•Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.

•Level 2: Fair value measured either with: (1) adjusted quoted prices from an active market for similar assets or liabilities; or (2) other valuation inputs that are directly or indirectly observable.

•Level 3: Fair value measured with unobservable inputs that are significant to the measurement.

We classify the fair value of an asset or liability based on the significance of its observable or unobservable inputs to the measurement. However, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable.

We used the following methods and assumptions to estimate the fair value of financial instruments:

•Cash and cash equivalents—The carrying amount reported on our consolidated balance sheet approximates fair value.

•Accounts and notes receivable—The carrying amount reported on our consolidated balance sheet approximates fair value.

•Derivative instruments—The fair value of our exchange-traded contracts is based on quoted market prices obtained from the New York Mercantile Exchange, the Intercontinental Exchange or other exchanges, and is reported as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity, or are valued using either adjusted exchange-provided prices or nonexchange quotes, we classify those contracts as Level 2 or Level 3 based on the degree to which inputs are observable.

Physical commodity forward purchase and sales contracts and over-the-counter (OTC) financial swaps are generally valued using forward quotes provided by brokers and price index developers, such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. When forward market prices are not available, we estimate fair value using the forward price of a similar commodity, adjusted for the difference in quality or location. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, physical commodity purchase and sales contracts and OTC swaps are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Physical and OTC commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or 3. We use a midmarket pricing convention (the midpoint between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.

We determine the fair value of interest rate swaps based on observable market valuations for interest rate swaps that have notional amounts, terms and pay and reset frequencies similar to ours.

•Rabbi trust assets—These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.

•Investment in NOVONIX—Our investment in NOVONIX is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.

•Other investments—Includes other marketable securities with observable market prices.

•Debt—The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated primarily based on observable market prices.

The following tables display the fair value hierarchy for our financial assets and liabilities either accounted for or disclosed at fair value on a recurring basis. These values are determined by treating each contract as the fundamental unit of account; therefore, derivative assets and liabilities with the same counterparty are shown on a gross basis in the hierarchy sections of these tables, before the effects of counterparty and collateral netting. The following tables also reflect the effect of netting derivative assets and liabilities with the same counterparty for which we have the legal right of offset and collateral netting.

The carrying values and fair values by hierarchy of our financial assets and liabilities, either carried or disclosed at fair value, including any effects of counterparty and collateral netting, were:

	Millions of Dollars
	March 31, 2023
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	2,914	76	2	2,992	(2,867)	(1)	—	124
OTC instruments	—		13	13	26	—	—	—	26
Physical forward contracts	—		68	2	70	(22)	—	—	48
Rabbi trust assets	179		—	—	179	N/A	N/A	—	179
Investment in NOVONIX	66		—	—	66	N/A	N/A	—	66
	$	3,159	157	17	3,333	(2,889)	(1)	—	443
Commodity Derivative Liabilities
Exchange-cleared instruments	$	2,883	82	2	2,967	(2,867)	(15)	—	85
OTC instruments	—		4	—	4	—	—	—	4
Physical forward contracts	—		34	—	34	(22)	—	—	12
Floating-rate debt	—		600	—	600	N/A	N/A	—	600
Fixed-rate debt, excluding finance leases and software obligations	—		16,919	—	16,919	N/A	N/A	696	17,615
	$	2,883	17,639	2	20,524	(2,889)	(15)	696	18,316

	Millions of Dollars
	December 31, 2022
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	1,615	130	3	1,748	(1,582)	—	—	166
OTC instruments	—		7	16	23	—	—	—	23
Physical forward contracts	—		86	3	89	(12)	—	—	77
Rabbi trust assets	126		—	—	126	N/A	N/A	—	126
Investment in NOVONIX	78		—	—	78	N/A	N/A	—	78
Other investments	42		1	—	43	N/A	N/A	—	43
	$	1,861	224	22	2,107	(1,594)	—	—	513
Commodity Derivative Liabilities
Exchange-cleared instruments	$	1,676	164	5	1,845	(1,582)	(90)	—	173
OTC instruments	—		9	—	9	—	—	—	9
Physical forward contracts	—		42	—	42	(12)	—	—	30
Floating-rate debt	—		65	—	65	N/A	N/A	—	65
Fixed-rate debt, excluding finance leases and software obligations	—		15,871	—	15,871	N/A	N/A	977	16,848
	$	1,676	16,151	5	17,832	(1,594)	(90)	977	17,125

The rabbi trust assets and investment in NOVONIX are recorded in the “Investments and long-term receivables” line item, and floating-rate and fixed-rate debt are recorded in the “Short-term debt” and “Long-term debt” line items on our consolidated balance sheet. See Note 14—Derivatives and Financial Instruments, for information regarding where the assets and liabilities related to our commodity derivatives are recorded on our consolidated balance sheet.

Nonrecurring Fair Value Measurements

DCP Midstream and Gray Oak Holdings Merger

On August 17, 2022, we and Enbridge agreed to merge DCP Midstream and Gray Oak Holdings with DCP Midstream as the surviving entity. As a result, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills, and accordingly, accounted for the business combination using the acquisition method of accounting, which requires DCP Midstream Class A Segment’s, DCP Sand Hills’ and DCP Southern Hills’, assets and liabilities to be recorded at fair value as of the acquisition date on our consolidated balance sheet. See Note 4—Business Combinations, for additional information on the merger transaction.

Equity Investments

The preliminary fair value of the investments we acquired that are accounted for under the equity method was $2,215 million. The preliminary fair value of these assets was determined using the income approach. The income approach used discounted cash flow models that require various observable and non-observable inputs, such as margins, tariffs and rates, utilization, volumes, product costs, operating expenses, capital expenditures, terminal-year values and risk-adjusted discount rates. These valuations resulted in Level 3 nonrecurring fair value measurements.

PP&E

The preliminary fair value of PP&E was $12,850 million. The preliminary fair value of these assets was determined primarily using the cost approach. The cost approach used assumptions for the current replacement costs of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence. The estimated fair value of properties was determined using a sales comparison approach. These valuations resulted in Level 3 nonrecurring fair value measurements.

Debt

The preliminary fair value of DCP LP’s senior and junior subordinated notes was measured using a market approach, based on the average of quotes for the acquired debt from major financial institutions. These valuations resulted in Level 2 nonrecurring fair value measurements.

Noncontrolling Interests

As a result of our consolidation of the DCP Midstream Class A Segment, the noncontrolling interests held in the DCP Midstream Class A Segment were recorded at their estimated fair values on the merger date. These noncontrolling interests primarily include Enbridge’s indirect economic interest in DCP LP, the public holders of DCP LP’s common units and the holders of DCP LP’s preferred units. The fair value of the noncontrolling interests in DCP LP’s common units was based on their unit market price as of the date of the merger, August 17, 2022. The fair value of the noncontrolling interests in DCP LP’s publicly traded preferred units was based on their respective market price as of the date of the merger, August 17, 2022. These valuations resulted in Level 1 nonrecurring fair value measurements. The preliminary fair value of the noncontrolling interests in DCP LP’s other preferred units was based on an income approach that used projected distributions that were discounted using an average implied yield of DCP LP’s publicly traded preferred units and expected redemption dates. This valuation resulted in a Level 2 nonrecurring fair value measurement.

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Pension and Postretirement Plans

3 Months Ended

Mar. 31, 2023

Retirement Benefits [Abstract]

Pension and Postretirement Plans

Pension and Postretirement Plans

The components of net periodic benefit cost for the three months ended March 31, 2023 and 2022, were as follows:

	Millions of Dollars
	Pension Benefits					Other Benefits
	2023			2022		2023	2022
	U.S.		Int’l.	U.S.	Int’l.
Components of Net Periodic Benefit Cost
Three Months Ended March 31
Service cost	$	27	3	35	8	1	1
Interest cost	29		8	21	6	2	1
Expected return on plan assets	(31)		(10)	(39)	(16)	—	—
Amortization of net actuarial loss (gain)	3		(1)	6	3	(2)	(1)
Settlements	10		—	1	—	—	—
Net periodic benefit cost*	$	38	—	24	1	1	1
* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.

During the three months ended March 31, 2023, we contributed $29 million to our U.S. pension and other postretirement benefit plans and $5 million to our international pension plans. We currently expect to make additional contributions of approximately $40 million to our U.S. pension and other postretirement benefit plans and approximately $15 million to our international pension plans during the remainder of 2023.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Changes in the balances of each component of accumulated other comprehensive loss were as follows:

	Millions of Dollars
	Defined Benefit Plans		Foreign Currency Translation	Hedging	Accumulated Other Comprehensive Loss
December 31, 2022	$	(122)	(336)	(2)	(460)
Other comprehensive income before reclassifications	2		77	—	79
Amounts reclassified from accumulated other    comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss and settlements	8		—	—	8
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income	10		77	—	87
March 31, 2023	$	(112)	(259)	(2)	(373)
December 31, 2021	$	(398)	(45)	(2)	(445)
Other comprehensive income (loss) before reclassifications	4		(82)	—	(78)
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss, prior service credit and settlements	9		—	—	9
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income (loss)	13		(82)	—	(69)
March 31, 2022	$	(385)	(127)	(2)	(514)
* Included in the computation of net periodic benefit cost. See Note 16—Pension and Postretirement Plans, for additional information.

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Significant transactions with related parties were:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Operating revenues and other income (a)(d)	$	1,304	1,340
Purchases (b)(d)	3,699		4,681
Operating expenses and selling, general and administrative expenses (c)	72		70

(a)We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), NGL and certain feedstocks to DCP Midstream, gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the Marketing and Specialties (M&S) segment, including OnCue and CF United. We also sold certain feedstocks and intermediate products to WRB Refining LP (WRB) and acted as an agent for WRB in supplying crude oil and other feedstocks for a fee. In addition, we charged several of our equity affiliates, including CPChem, for the use of common facilities, such as steam generators, waste and water treaters and warehouse facilities.

(b)We purchased crude oil, refined petroleum products, NGL and solvents from WRB. We also purchased natural gas and NGL from DCP Midstream and CPChem, as well as other feedstocks from various equity affiliates, for use in our refinery and fractionation processes. In addition, we purchased base oils and fuel products from Excel Paralubes for use in our specialty and refining businesses. We paid NGL fractionation fees to CPChem. We also paid fees to various pipeline equity affiliates for transporting crude oil, refined petroleum products and NGL.

(c)We paid consignment fees to CF United, and utility and processing fees to various equity affiliates.

(d)As a result of the DCP Midstream and Gray Oak Holdings merger, we began consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. As a result, transactions with these parties after August 17, 2022, are not presented in the table above.

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Segment Disclosures and Related Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Disclosures and Related Information

Segment Disclosures and Related Information

Effective October 1, 2022, we changed the organizational structure of the internal financial information reviewed by our President and Chief Executive Officer, and determined this resulted in a change in the composition of our operating segments. As part of the realignment, we moved the results and net assets of our Merey Sweeny vacuum distillation and delayed coker units at our Sweeny Refinery and the isomerization unit at our Lake Charles Refinery from our Midstream segment to our Refining segment. Additionally, commissions charged to the Refining segment by the M&S segment related to sales of specialty products were eliminated and the costs of the sales organization were reclassified from the M&S segment to the Refining segment. The segment realignment is presented for the three months ended March 31, 2023, with prior periods recast for comparability.

Our operating segments are:

1)Midstream—Provides natural gas and NGL transportation, storage, fractionation, gathering, processing and marketing services, as well as crude oil and refined petroleum product transportation, terminaling and processing services, mainly in the United States. As a result of the merger on August 17, 2022, we began consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. On March 9, 2022, we also completed the merger between us and Phillips 66 Partners. See Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and Note 22—Phillips 66 Partners LP, for additional information on these transactions. This segment also includes our 16% investment in NOVONIX.

2)Chemicals—Consists of our 50% equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.

3)Refining—Refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, at 12 refineries in the United States and Europe.

4)Marketing and Specialties—Purchases for resale and markets refined petroleum products and renewable fuels, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

Corporate and Other includes general corporate overhead, interest expense, our investment in research of new technologies and various other corporate activities. Corporate assets include all cash, cash equivalents and income tax-related assets. Corporate and Other also includes restructuring costs related to our business transformation. See Note 23—Restructuring for additional information regarding restructuring costs.

Intersegment sales are at prices that we believe approximate market.

Analysis of Results by Operating Segment

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Sales and Other Operating Revenues*
Midstream
Total sales	$	5,292	4,022
Intersegment eliminations	(695)		(826)
Total Midstream	4,597		3,196
Chemicals	—		—
Refining
Total sales	22,341		24,141
Intersegment eliminations	(14,095)		(15,576)
Total Refining	8,246		8,565
Marketing and Specialties
Total sales	22,399		25,211
Intersegment eliminations	(855)		(798)
Total Marketing and Specialties	21,544		24,413
Corporate and Other	9		5
Consolidated sales and other operating revenues	$	34,396	36,179
* See Note 5—Sales and Other Operating Revenues, for further details on our disaggregated sales and other operating revenues.
Income (Loss) Before Income Taxes
Midstream	$	702	212
Chemicals	198		396
Refining	1,608		173
Marketing and Specialties	426		296
Corporate and Other	(283)		(249)
Consolidated income before income taxes	$	2,651	828

	Millions of Dollars
	March 31 2023		December 31 2022
Total Assets
Midstream	$	29,358	30,273
Chemicals	6,981		6,785
Refining	22,750		21,581
Marketing and Specialties	9,443		9,939
Corporate and Other	8,730		7,864
Consolidated total assets	$	77,262	76,442

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Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our effective income tax rate for the three months ended March 31, 2023, was 22%, compared with 21% for the corresponding period of 2022. The increase in our effective tax rate for the three months ended March 31, 2023, was primarily attributable to non-taxable foreign earnings of our chemical joint venture and an increase in foreign tax rate.

The effective tax rate for the three months ended March 31, 2023, varied from the U.S. federal statutory income tax rate primarily due to state income taxes, partially offset by the impact of foreign operations and noncontrolling interest.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA) that includes, among other provisions, changes to the U.S. corporate income tax system, including 15% minimum tax based on adjusted financial statement income as defined in the IRA, which was effective after December 31, 2022. We do not anticipate owing 2023 corporate alternative minimum tax as the regular U.S. tax liability is forecasted to exceed the corporate alternative minimum tax.

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DCP Midstream Class A Segment

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DCP Midstream Class A Segment

Note 21—DCP Midstream Class A Segment

DCP Midstream Class A Segment is a VIE and we are the primary beneficiary. DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities. Refer to Note 3—DCP Midstream, LLC and Gray Oak Holdings LLC Merger and Note 4—Business Combinations, for more details on the DCP Midstream and Gray Oak Holdings merger transaction and related accounting.

DCP LP, headquartered in Denver, Colorado, is a publicly traded master limited partnership whose operations currently include producing and fractionating NGL, gathering, compressing, treating and processing natural gas; recovering condensate; and transporting, trading, marketing and storing natural gas and NGL.

As a result of our consolidation of DCP Midstream Class A Segment, the public common and preferred unitholders’ ownership interests and Enbridge’s indirect economic interest in DCP LP are reflected as noncontrolling interests in our consolidated financial statements. At March 31, 2023, we held a 43.3% indirect economic interest in DCP LP.

The most significant assets of DCP Midstream Class A Segment that are available to settle only its obligations, along with its most significant liabilities for which its creditors do not have recourse to Phillips 66’s general credit, were:

	Millions of Dollars
	March 31 2023		December 31 2022
Accounts receivable, trade*	$	713	988
Net properties, plants and equipment	9,280		9,297
Investments in unconsolidated affiliates**	2,182		2,161
Accounts payable	755		1,239
Short-term debt	4		504
Long-term debt	4,808		4,248

* Included in the “Accounts and notes receivable” line item on the Phillips 66 consolidated balance sheet.

** Included in the “Investments and long-term receivables” line item on the Phillips 66 consolidated balance sheet.

Preferred Units

DCP LP’s preferred units rank senior to its common units with respect to distribution rights and rights upon liquidations. Holders of DCP LP’s preferred units have no voting rights except for certain limited protective voting rights. Distributions on the preferred units are payable out of DCP LP’s available cash, are accretive and are cumulative from the date of original issuance of the preferred units.

Distributions on the Series B preferred units are payable quarterly in arrears in March, June, September and December of each year. Distributions on the Series C preferred units are payable quarterly in arrears in January, April, July and October of each year. During the three months ended March 31, 2023, DCP LP made cash distributions of $3 million to Series B preferred unitholders and $2 million to Series C preferred unitholders.

As of March 31, 2023, DCP LP had 6,450,000 Series B preferred units outstanding with an aggregate liquidation preference of approximately $161 million, and 4,400,000 Series C preferred units outstanding with an aggregate liquidation preference of $110 million. The Series B and C preferred units are publicly traded on the New York Stock Exchange.

Common Units

As of March 31, 2023, DCP LP had approximately 209 million of common units outstanding, of which approximately 91 million were publicly held. In addition, Enbridge holds a 23.36% economic interest in the approximately 118 million common units held by DCP Midstream Class A Segment. During the three months ended March 31, 2023, DCP LP made cash distributions of $51 million to common unit holders other than Phillips 66.

DCP LP Public Common Unit Acquisition

On January 5, 2023, we entered into a definitive agreement with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries will merge with and into DCP LP, with DCP LP surviving as a Delaware limited partnership. Under the terms of the agreement, at the effective time of the merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and DCP Midstream GP, LP) issued and outstanding as of immediately prior to the effective time will be converted into the right to receive $41.75 per common unit in cash, without interest. The merger will increase our economic interest in DCP LP from 43.3% to 86.8%. The transaction is expected to close in the second quarter of 2023, subject to customary closing conditions.

If the merger is successfully completed, we will pay approximately $3.8 billion in cash consideration, which we expect to fund through a combination of cash generated from operating activities, proceeds from the offering of the Notes and borrowings under the Term Loan Agreement. See Note 11—Debt, for additional information.

The transaction was unanimously approved by the board of the general partner of DCP LP, based on the unanimous approval and recommendation of its special committee comprised entirely of independent directors after evaluation of the transaction by the special committee in consultation with independent financial and legal advisors. Concurrently with the execution of the agreement, affiliates of Phillips 66, which together own greater than a majority of the outstanding DCP LP common units, delivered their consent to approve the transaction. As a result, DCP LP has not solicited and is not soliciting approval of the transaction by any other holders of DCP LP common units.

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Phillips 66 Partners LP	3 Months Ended
	Mar. 31, 2023
Limited Liability Company or Limited Partnership, Business Organization and Operations [Abstract]
Phillips 66 Partners LP	Phillips 66 Partners LPOn March 9, 2022, we completed a merger between us and Phillips 66 Partners. The merger resulted in the acquisition of all limited partnership interests in Phillips 66 Partners not already owned by us in exchange for 41.8 million shares of Phillips 66 common stock issued from treasury stock. Phillips 66 Partners common unitholders received 0.50 shares of Phillips 66 common stock for each outstanding Phillips 66 Partners common unit. Phillips 66 Partners’ perpetual convertible preferred units were converted into common units at a premium to the original issuance price prior to being exchanged for Phillips 66 common stock. The merger was accounted for as an equity transaction. Upon closing, Phillips 66 Partners became a wholly owned subsidiary of Phillips 66 and its common units are no longer publicly traded.

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Restructuring	3 Months Ended
	Mar. 31, 2023
Restructuring and Related Activities [Abstract]
Restructuring	RestructuringIn April 2022, we announced that we are progressing a multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure. For the three months ended March 31, 2023, we recorded restructuring costs totaling $35 million, primarily related to consulting fees. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Corporate segment. In addition, in the first quarter of 2023, we recorded restructuring costs of $12 million associated with the integration of DCP Midstream Class A Segment primarily related to severance. These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Midstream segment.

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Change in Accounting Principle (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

Change in Accounting Principle

Change in Accounting PrincipleEffective January 1, 2023, we adopted ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. At the time of adoption, this ASU did not have a material impact on our consolidated financial statements.

Earnings Per Share

Earnings Per Share The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, adjusted for noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.

Contingencies and Commitments

A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for financial recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is uncertain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Recurring Fair Value Measurements

Recurring Fair Value Measurements

We carry certain assets and liabilities at fair value, which we measure at the reporting date using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:

•Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.

•Level 2: Fair value measured either with: (1) adjusted quoted prices from an active market for similar assets or liabilities; or (2) other valuation inputs that are directly or indirectly observable.

•Level 3: Fair value measured with unobservable inputs that are significant to the measurement.

We classify the fair value of an asset or liability based on the significance of its observable or unobservable inputs to the measurement. However, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable.

We used the following methods and assumptions to estimate the fair value of financial instruments:

•Cash and cash equivalents—The carrying amount reported on our consolidated balance sheet approximates fair value.

•Accounts and notes receivable—The carrying amount reported on our consolidated balance sheet approximates fair value.

•Derivative instruments—The fair value of our exchange-traded contracts is based on quoted market prices obtained from the New York Mercantile Exchange, the Intercontinental Exchange or other exchanges, and is reported as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity, or are valued using either adjusted exchange-provided prices or nonexchange quotes, we classify those contracts as Level 2 or Level 3 based on the degree to which inputs are observable.

Physical commodity forward purchase and sales contracts and over-the-counter (OTC) financial swaps are generally valued using forward quotes provided by brokers and price index developers, such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. When forward market prices are not available, we estimate fair value using the forward price of a similar commodity, adjusted for the difference in quality or location. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, physical commodity purchase and sales contracts and OTC swaps are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Physical and OTC commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or 3. We use a midmarket pricing convention (the midpoint between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.

We determine the fair value of interest rate swaps based on observable market valuations for interest rate swaps that have notional amounts, terms and pay and reset frequencies similar to ours.

•Rabbi trust assets—These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.

•Investment in NOVONIX—Our investment in NOVONIX is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.

•Other investments—Includes other marketable securities with observable market prices.

•Debt—The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated primarily based on observable market prices.

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Business Combinations (Tables)

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Fair Value of Consideration Transferred and Amounts Included in Operations

The components of the fair value of the merger consideration are:

	Millions of Dollars
Cash contributed	$	404
Fair value of transferred equity interest	634
Fair value of previously held equity interests	3,853
Total merger consideration	$	4,891

Schedule of Purchase Price Allocation

The following table shows the preliminary purchase price allocation as of the date of the merger, and cumulative adjustments we have made as of March 31, 2023:

	Millions of Dollars
	As Originally Reported		Adjustments	As Adjusted
Fair value of assets acquired:
Cash and cash equivalents	$	98	—	98
Accounts and notes receivable	1,003		—	1,003
Inventories	74		166	240
Prepaid expenses and other current assets	439		—	439
Investments and long-term receivables	2,192		57	2,249
Properties, plants and equipment	12,837		13	12,850
Intangibles	36		(36)	—
Other assets	343		(158)	185
Total assets acquired	17,022		42	17,064
Fair value of liabilities assumed:
Accounts payable	912		—	912
Short-term debt	625		(2)	623
Accrued income and other taxes	107		(11)	96
Employee benefit obligation—current	50		22	72
Other accruals	497		(21)	476
Long-term debt	4,541		40	4,581
Asset retirement obligations and accrued environmental costs	168		16	184
Deferred income taxes	40		14	54
Employee benefit obligations	54		—	54
Other liabilities and deferred credits	227		(5)	222
Total liabilities assumed	7,221		53	7,274
Fair value of net assets	9,801		(11)	9,790
Less: Fair value of noncontrolling interests	4,910		(11)	4,899
Total merger consideration	$	4,891	—	4,891

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Sales and Other Operating Revenues (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following tables present our disaggregated sales and other operating revenues:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Product Line and Services
Refined petroleum products	$	24,718	29,382
Crude oil resales	4,565		3,755
Natural gas liquids (NGL) and natural gas	4,421		3,230
Services and other*	692		(188)
Consolidated sales and other operating revenues	$	34,396	36,179
Geographic Location**
United States	$	27,065	28,885
United Kingdom	3,930		3,640
Germany	1,306		1,382
Other countries	2,095		2,272
Consolidated sales and other operating revenues	$	34,396	36,179
* Includes derivatives-related activities. See Note 14—Derivatives and Financial Instruments, for additional information.
** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following:

	Millions of Dollars
	March 31 2023		December 31 2022
Crude oil and petroleum products	$	5,046	2,914
Materials and supplies	399		362
	$	5,445	3,276

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Properties, Plants and Equipment (Tables)

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Properties, Plants and Equipment with Associated Accumulated Depreciation and Amortization

Our gross investment in PP&E and the associated accumulated depreciation and amortization (Accum. D&A) balances were as follows:

	Millions of Dollars
	March 31, 2023				December 31, 2022
	Gross PP&E		Accum. D&A	Net PP&E	Gross PP&E	Accum. D&A	Net PP&E
Midstream	$	25,549	3,743	21,806	25,422	3,524	21,898
Chemicals	—		—	—	—	—	—
Refining	24,236		12,500	11,736	24,200	12,523	11,677
Marketing and Specialties	1,829		1,095	734	1,800	1,058	742
Corporate and Other	1,580		745	835	1,568	722	846
	$	53,194	18,083	35,111	52,990	17,827	35,163

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic and Diluted Earnings Per Share

	Three Months Ended March 31
	2023			2022
	Basic		Diluted	Basic	Diluted
Amounts Attributed to Phillips 66 Common Stockholders (millions):
Net Income Attributable to Phillips 66	$	1,961	1,961	582	582
Income allocated to participating securities	(3)		(1)	(2)	(2)
Net income available to common stockholders	$	1,958	1,960	580	580
Weighted-average common shares outstanding (thousands):	462,870		464,810	447,206	449,298
Effect of share-based compensation	1,940		2,224	2,092	713
Weighted-average common shares outstanding—EPS	464,810		467,034	449,298	450,011
Earnings Per Share of Common Stock (dollars)	$	4.21	4.20	1.29	1.29

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Derivatives and Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Offsetting Assets

The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities. The balances in the following table are presented on a gross basis, before the effects of counterparty and collateral netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our consolidated balance sheet when the legal right of offset exists.

	Millions of Dollars
	March 31, 2023					December 31, 2022
	Commodity Derivatives			Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet	Commodity Derivatives		Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet
	Assets		Liabilities			Assets	Liabilities
Assets
Prepaid expenses and other current assets	$	3,008	(2,834)	(1)	173	1,331	(1,110)	—	221
Other assets	29		(4)	—	25	46	(1)	—	45
Liabilities
Other accruals	27		(144)	15	(102)	471	(750)	90	(189)
Other liabilities and deferred credits	24		(23)	—	1	12	(35)	—	(23)
Total	$	3,088	(3,005)	14	97	1,860	(1,896)	90	54

Schedule of Offsetting Liabilities

The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities. The balances in the following table are presented on a gross basis, before the effects of counterparty and collateral netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our consolidated balance sheet when the legal right of offset exists.

	Millions of Dollars
	March 31, 2023					December 31, 2022
	Commodity Derivatives			Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet	Commodity Derivatives		Effect of Collateral Netting	Net Carrying Value Presented on the Balance Sheet
	Assets		Liabilities			Assets	Liabilities
Assets
Prepaid expenses and other current assets	$	3,008	(2,834)	(1)	173	1,331	(1,110)	—	221
Other assets	29		(4)	—	25	46	(1)	—	45
Liabilities
Other accruals	27		(144)	15	(102)	471	(750)	90	(189)
Other liabilities and deferred credits	24		(23)	—	1	12	(35)	—	(23)
Total	$	3,088	(3,005)	14	97	1,860	(1,896)	90	54

Schedule of Fair Value of Commodity Derivative Assets and Liabilities and Gains (Losses) from Derivative Contracts

The realized and unrealized gains (losses) incurred from commodity derivatives, and the line items where they appear on our consolidated statement of income, were:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Sales and other operating revenues	$	50	(420)
Other income (loss)	(14)		25
Purchased crude oil and products	137		(228)
Net gain (loss) from commodity derivative activity	$	173	(623)

Schedule of Material Net Exposures and Notional Amount of Derivative Contracts

The following table summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying operations. The underlying exposures may be from nonderivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward purchase and sales contracts. The percentage of our derivative contract volumes expiring within the next 12 months was more than 90% at March 31, 2023, and December 31, 2022.

	Open Position Long / (Short)
	March 31 2023	December 31 2022
Commodity
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels)	(37)	(25)
Natural gas (billions of cubic feet)	(37)	(77)

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value Hierarchy for Material Financial Instruments and Derivative Assets and Liabilities, Including the Effect of Counterparty Netting

The carrying values and fair values by hierarchy of our financial assets and liabilities, either carried or disclosed at fair value, including any effects of counterparty and collateral netting, were:

	Millions of Dollars
	March 31, 2023
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	2,914	76	2	2,992	(2,867)	(1)	—	124
OTC instruments	—		13	13	26	—	—	—	26
Physical forward contracts	—		68	2	70	(22)	—	—	48
Rabbi trust assets	179		—	—	179	N/A	N/A	—	179
Investment in NOVONIX	66		—	—	66	N/A	N/A	—	66
	$	3,159	157	17	3,333	(2,889)	(1)	—	443
Commodity Derivative Liabilities
Exchange-cleared instruments	$	2,883	82	2	2,967	(2,867)	(15)	—	85
OTC instruments	—		4	—	4	—	—	—	4
Physical forward contracts	—		34	—	34	(22)	—	—	12
Floating-rate debt	—		600	—	600	N/A	N/A	—	600
Fixed-rate debt, excluding finance leases and software obligations	—		16,919	—	16,919	N/A	N/A	696	17,615
	$	2,883	17,639	2	20,524	(2,889)	(15)	696	18,316

	Millions of Dollars
	December 31, 2022
	Fair Value Hierarchy				Total Fair Value of Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value Presented on the Balance Sheet
	Level 1		Level 2	Level 3
Commodity Derivative Assets
Exchange-cleared instruments	$	1,615	130	3	1,748	(1,582)	—	—	166
OTC instruments	—		7	16	23	—	—	—	23
Physical forward contracts	—		86	3	89	(12)	—	—	77
Rabbi trust assets	126		—	—	126	N/A	N/A	—	126
Investment in NOVONIX	78		—	—	78	N/A	N/A	—	78
Other investments	42		1	—	43	N/A	N/A	—	43
	$	1,861	224	22	2,107	(1,594)	—	—	513
Commodity Derivative Liabilities
Exchange-cleared instruments	$	1,676	164	5	1,845	(1,582)	(90)	—	173
OTC instruments	—		9	—	9	—	—	—	9
Physical forward contracts	—		42	—	42	(12)	—	—	30
Floating-rate debt	—		65	—	65	N/A	N/A	—	65
Fixed-rate debt, excluding finance leases and software obligations	—		15,871	—	15,871	N/A	N/A	977	16,848
	$	1,676	16,151	5	17,832	(1,594)	(90)	977	17,125

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Pension and Postretirement Plans (Tables)

3 Months Ended

Mar. 31, 2023

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended March 31, 2023 and 2022, were as follows:

	Millions of Dollars
	Pension Benefits					Other Benefits
	2023			2022		2023	2022
	U.S.		Int’l.	U.S.	Int’l.
Components of Net Periodic Benefit Cost
Three Months Ended March 31
Service cost	$	27	3	35	8	1	1
Interest cost	29		8	21	6	2	1
Expected return on plan assets	(31)		(10)	(39)	(16)	—	—
Amortization of net actuarial loss (gain)	3		(1)	6	3	(2)	(1)
Settlements	10		—	1	—	—	—
Net periodic benefit cost*	$	38	—	24	1	1	1
* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Changes in the balances of each component of accumulated other comprehensive loss were as follows:

	Millions of Dollars
	Defined Benefit Plans		Foreign Currency Translation	Hedging	Accumulated Other Comprehensive Loss
December 31, 2022	$	(122)	(336)	(2)	(460)
Other comprehensive income before reclassifications	2		77	—	79
Amounts reclassified from accumulated other    comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss and settlements	8		—	—	8
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income	10		77	—	87
March 31, 2023	$	(112)	(259)	(2)	(373)
December 31, 2021	$	(398)	(45)	(2)	(445)
Other comprehensive income (loss) before reclassifications	4		(82)	—	(78)
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss, prior service credit and settlements	9		—	—	9
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income (loss)	13		(82)	—	(69)
March 31, 2022	$	(385)	(127)	(2)	(514)
* Included in the computation of net periodic benefit cost. See Note 16—Pension and Postretirement Plans, for additional information.

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Schedule of Significant Transactions with Related Parties

Significant transactions with related parties were:

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Operating revenues and other income (a)(d)	$	1,304	1,340
Purchases (b)(d)	3,699		4,681
Operating expenses and selling, general and administrative expenses (c)	72		70

(a)We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), NGL and certain feedstocks to DCP Midstream, gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the Marketing and Specialties (M&S) segment, including OnCue and CF United. We also sold certain feedstocks and intermediate products to WRB Refining LP (WRB) and acted as an agent for WRB in supplying crude oil and other feedstocks for a fee. In addition, we charged several of our equity affiliates, including CPChem, for the use of common facilities, such as steam generators, waste and water treaters and warehouse facilities.

(b)We purchased crude oil, refined petroleum products, NGL and solvents from WRB. We also purchased natural gas and NGL from DCP Midstream and CPChem, as well as other feedstocks from various equity affiliates, for use in our refinery and fractionation processes. In addition, we purchased base oils and fuel products from Excel Paralubes for use in our specialty and refining businesses. We paid NGL fractionation fees to CPChem. We also paid fees to various pipeline equity affiliates for transporting crude oil, refined petroleum products and NGL.

(c)We paid consignment fees to CF United, and utility and processing fees to various equity affiliates.

(d)As a result of the DCP Midstream and Gray Oak Holdings merger, we began consolidating DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills. As a result, transactions with these parties after August 17, 2022, are not presented in the table above.

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Segment Disclosures and Related Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Schedule of Analysis of Results by Operating Segment

Analysis of Results by Operating Segment

	Millions of Dollars
	Three Months Ended March 31
	2023		2022
Sales and Other Operating Revenues*
Midstream
Total sales	$	5,292	4,022
Intersegment eliminations	(695)		(826)
Total Midstream	4,597		3,196
Chemicals	—		—
Refining
Total sales	22,341		24,141
Intersegment eliminations	(14,095)		(15,576)
Total Refining	8,246		8,565
Marketing and Specialties
Total sales	22,399		25,211
Intersegment eliminations	(855)		(798)
Total Marketing and Specialties	21,544		24,413
Corporate and Other	9		5
Consolidated sales and other operating revenues	$	34,396	36,179
* See Note 5—Sales and Other Operating Revenues, for further details on our disaggregated sales and other operating revenues.
Income (Loss) Before Income Taxes
Midstream	$	702	212
Chemicals	198		396
Refining	1,608		173
Marketing and Specialties	426		296
Corporate and Other	(283)		(249)
Consolidated income before income taxes	$	2,651	828

Schedule of Reconciliation of Assets from Segment to Consolidated

	Millions of Dollars
	March 31 2023		December 31 2022
Total Assets
Midstream	$	29,358	30,273
Chemicals	6,981		6,785
Refining	22,750		21,581
Marketing and Specialties	9,443		9,939
Corporate and Other	8,730		7,864
Consolidated total assets	$	77,262	76,442

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DCP Midstream Class A Segment (Tables)

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities

The most significant assets of DCP Midstream Class A Segment that are available to settle only its obligations, along with its most significant liabilities for which its creditors do not have recourse to Phillips 66’s general credit, were:

	Millions of Dollars
	March 31 2023		December 31 2022
Accounts receivable, trade*	$	713	988
Net properties, plants and equipment	9,280		9,297
Investments in unconsolidated affiliates**	2,182		2,161
Accounts payable	755		1,239
Short-term debt	4		504
Long-term debt	4,808		4,248

* Included in the “Accounts and notes receivable” line item on the Phillips 66 consolidated balance sheet.

** Included in the “Investments and long-term receivables” line item on the Phillips 66 consolidated balance sheet.

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DCP Midstream, LLC and Gray Oak Holdings LLC Merger (Details) - class	Aug. 17, 2022	Aug. 16, 2022
Merger of DCP Midstream, LLC and Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Number of classes of membership created	2
Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership		65.00%
DCP LP | Variable Interest Entity, Primary Beneficiary
Schedule of Equity Method Investments [Line Items]
Indirect economic interests	43.30%
DCP Midstream Class A Segment | DCP LP
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	76.64%
DCP Sand Hills And DCP Southern Hills
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	62.20%
Direct and indirect economic interest	33.33%
DCP Midstream, LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest		50.00%
DCP Midstream, LLC | Enbridge Inc
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest		50.00%
DCP LP
Schedule of Equity Method Investments [Line Items]
Indirect economic interest		28.26%
Gray Oak Holdings LLC | Enbridge Inc | Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest		35.00%
Gray Oak Pipeline LLC
Schedule of Equity Method Investments [Line Items]
Indirect economic interest		42.25%
Gray Oak Pipeline LLC | Class B Membership
Schedule of Equity Method Investments [Line Items]
Indirect economic interest	6.50%
Gray Oak Pipeline LLC | Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest		65.00%
Gray Oak Pipeline LLC | Enbridge Inc
Schedule of Equity Method Investments [Line Items]
Indirect economic interest		22.75%
Gray Oak Pipeline LLC | Enbridge Inc | Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest		35.00%
Gray Oak Pipeline LLC | DCP Midstream Class B Segment
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	10.00%
DCP Sand Hills and Southern Hills
Schedule of Equity Method Investments [Line Items]
Direct and indirect economic interest		52.20%
DCP Sand Hills and Southern Hills | DCP LP | Variable Interest Entity, Primary Beneficiary
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	66.67%

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Business Combinations - Narrative (Details) - USD ($) $ in Millions	Apr. 10, 2023	Aug. 17, 2022
Merger of DCP Midstream, LLC and Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Cash contributed		$ 404
Merger of DCP Midstream, LLC and Gray Oak Holdings LLC | Variable Interest Entity, Primary Beneficiary | DCP LP
Schedule of Equity Method Investments [Line Items]
Ownership interest acquired		15.05%
Merger of DCP Midstream, LLC and Gray Oak Holdings LLC | Gray Oak Pipeline LLC | Enbridge Inc
Schedule of Equity Method Investments [Line Items]
Transferred indirect economic interest		35.75%
US West Coast Marketing Assets | Subsequent Event
Schedule of Equity Method Investments [Line Items]
Cash contributed	$ 260

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Business Combinations - Schedule of Fair Value of Consideration Transferred (Details) - Merger of DCP Midstream, LLC and Gray Oak Holdings LLC $ in Millions	Aug. 17, 2022 USD ($)
Business Acquisition [Line Items]
Cash contributed	$ 404
Fair value of transferred equity interest	634
Fair value of previously held equity interests	3,853
Total merger consideration	$ 4,891

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Business Combinations - Schedule of Purchase Price Allocation (Details) - Merger of DCP Midstream, LLC and Gray Oak Holdings LLC - USD ($) $ in Millions	7 Months Ended
	Mar. 31, 2023	Aug. 17, 2022
Fair value of assets acquired:
Cash and cash equivalents	$ 98	$ 98
Accounts and notes receivable	1,003	1,003
Inventories	240	74
Inventories	166
Prepaid expenses and other current assets	439	439
Investments and long-term receivables	2,249	2,192
Investments and long-term receivables	57
Properties, plants and equipment	12,850	12,837
Properties, plants and equipment	13
Intangibles	0	36
Intangibles	(36)
Other assets	185	343
Other assets	(158)
Total assets acquired	17,064	17,022
Total assets acquired	42
Fair value of liabilities assumed:
Accounts payable	912	912
Short-term debt	623	625
Short-term debt	(2)
Accrued income and other taxes	96	107
Accrued income and other taxes	(11)
Employee benefit obligation—current	72	50
Employee benefit obligation—current	22
Other accruals	476	497
Other accruals	(21)
Long-term debt	4,581	4,541
Long-term debt	40
Asset retirement obligations and accrued environmental costs	184	168
Asset retirement obligations and accrued environmental costs	16
Deferred income taxes	54	40
Deferred income taxes	14
Employee benefit obligations	54	54
Other liabilities and deferred credits	222	227
Other liabilities and deferred credits	(5)
Total liabilities assumed	7,274	7,221
Total liabilities assumed	53
Fair value of net assets	9,790	9,801
Fair value of net assets	(11)
Less: Fair value of noncontrolling interests	4,899	4,910
Less: Fair value of noncontrolling interests	(11)
Total merger consideration	$ 4,891	$ 4,891

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Sales and Other Operating Revenues - Disaggregated (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	$ 34,396	$ 36,179
United States
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	27,065	28,885
United Kingdom
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	3,930	3,640
Germany
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	1,306	1,382
Other countries
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	2,095	2,272
Refined petroleum products
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	24,718	29,382
Crude oil resales
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	4,565	3,755
Natural gas liquids (NGL) and natural gas
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	4,421	3,230
Services and other
Disaggregation of Revenue [Line Items]
Sales and other operating revenues	$ 692	$ (188)

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Sales and Other Operating Revenues - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Revenue from External Customer [Line Items]
Accounts receivable, before allowance for credit loss	$ 7,317	$ 8,749
Contract with customer, asset	509	505
Contract with customer, liability	203	$ 156
Remaining performance obligations	$ 446
Minimum
Revenue from External Customer [Line Items]
Customer contracts, term	5 years
Maximum
Revenue from External Customer [Line Items]
Customer contracts, term	15 years
Weighted Average
Revenue from External Customer [Line Items]
Remaining performance obligation life	3 years

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Credit Losses (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Credit Loss [Abstract]
Accounts and notes receivable	$ 9,326	$ 10,985
Allowance for credit losses	$ 67	$ 67
Accounts and notes receivable, percent outstanding less than 60 days	95.00%

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Inventories - Schedule of Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Crude oil and petroleum products	$ 5,046	$ 2,914
Materials and supplies	399	362
Inventories	$ 5,445	$ 3,276

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Inventories - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Inventory Disclosure [Abstract]
LIFO inventory amount	$ 4,837		$ 2,635
Estimated excess of current replacement cost over LIFO cost of inventories	6,000		$ 6,300
Increase (decrease) on net income (loss) from LIFO inventory liquidations	$ 4	$ 40

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Investments, Loans and Long-Term Receivables - Dakota Access, LLC and Energy Transfer Crude Oil, Company, LLC (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended
	Apr. 01, 2022	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 30, 2022
Dakota Access and ETCO
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest			25.00%		25.00%
Capital contribution		$ 89
Deferred distributions				$ 74
Maximum exposure, undiscounted			$ 467
Equity investments			659
Dakota Access, LLC
Schedule of Equity Method Investments [Line Items]
Scheduled interest payments annually			20
Senior Notes | Dakota Access and ETCO
Schedule of Equity Method Investments [Line Items]
Share of debt repayment		$ 163
Senior Notes | Dakota Access, LLC
Schedule of Equity Method Investments [Line Items]
Repayments of debt	$ 650
Debt issued and guaranteed			$ 1,850

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Investments, Loans and Long-Term Receivables - CF United LLC (Details) - CF United LLC $ in Millions	Mar. 31, 2023 USD ($)
Schedule of Equity Method Investments [Line Items]
Voting interest acquired	50.00%
Economic interest acquired	47.00%
Equity investments	$ 292

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Investments, Loans and Long-Term Receivables - OnCue Holdings, LLC (Details) - OnCue Holdings, LLC $ in Millions	Mar. 31, 2023 USD ($)
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	50.00%
Maximum loss exposure	$ 213
Equity investments	145
Maximum potential amount of future payments under the guarantees	$ 68

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Investments, Loans and Long-Term Receivables - DCP Midstream and Gray Oak Holdings Merger (Details)	Aug. 16, 2022
Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership	65.00%
DCP Sand Hills Pipeline, LLC
Schedule of Equity Method Investments [Line Items]
Direct and indirect economic interest	33.33%
DCP Midstream, LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	50.00%
DCP Midstream, LLC | Enbridge Inc
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	50.00%
Gray Oak Pipeline LLC
Schedule of Equity Method Investments [Line Items]
Indirect economic interest	42.25%
Gray Oak Pipeline LLC | Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	65.00%
Gray Oak Pipeline LLC | Enbridge Inc
Schedule of Equity Method Investments [Line Items]
Indirect economic interest	22.75%
Gray Oak Pipeline LLC | Enbridge Inc | Gray Oak Holdings LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	35.00%

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Investments, Loans and Long-Term Receivables - Other Investments (Details) - USD ($) shares in Millions, $ in Millions		1 Months Ended	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Mar. 31, 2023	Mar. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Unrealized investment loss			$ 11	$ 169
NOVONIX Limited
Debt and Equity Securities, FV-NI [Line Items]
Shares acquired (in shares)		78
Percent ownership of equity securities investment	16.00%
Equity securities			66
Unrealized investment loss			12
Equity securities, FV-NI, unrealized loss			11
Unrealized foreign currency loss			$ 1

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Properties, Plants and Equipment (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Gross PP&E	$ 53,194	$ 52,990
Accum. D&A	18,083	17,827
Net PP&E	35,111	35,163
Corporate, Non-Segment [Member]
Property, Plant and Equipment [Line Items]
Gross PP&E	1,580	1,568
Accum. D&A	745	722
Net PP&E	835	846
Midstream | Operating Segments
Property, Plant and Equipment [Line Items]
Gross PP&E	25,549	25,422
Accum. D&A	3,743	3,524
Net PP&E	21,806	21,898
Chemicals | Operating Segments
Property, Plant and Equipment [Line Items]
Gross PP&E	0	0
Accum. D&A	0	0
Net PP&E	0	0
Refining Segment [Member] | Operating Segments
Property, Plant and Equipment [Line Items]
Gross PP&E	24,236	24,200
Accum. D&A	12,500	12,523
Net PP&E	11,736	11,677
Marketing and Specialties | Operating Segments
Property, Plant and Equipment [Line Items]
Gross PP&E	1,829	1,800
Accum. D&A	1,095	1,058
Net PP&E	$ 734	$ 742

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Earnings Per Share - Schedule of Earnings Per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Basic
Net Income Attributable to Phillips 66	$ 1,961	$ 582
Income allocated to participating securities	(3)	(2)
Net income available to common stockholders	$ 1,958	$ 580
Weighted-average common shares outstanding (in shares)	462,870	447,206
Effect of share-based compensation (in shares)	1,940	2,092
Weighted-average commons shares outstanding - EPS (in shares)	464,810	449,298
Earnings Per Share of Common Stock (in usd per share)	$ 4.21	$ 1.29
Diluted
Net Income Attributable to Phillips 66	$ 1,961	$ 582
Income allocated to participating securities	(1)	(2)
Net income available to common stockholders	$ 1,960	$ 580
Weighted-average common shares outstanding (in shares)	464,810	449,298
Effect of share-based compensation (in shares)	2,224	713
Weighted-average commons shares outstanding - EPS (in shares)	467,034	450,011
Earnings Per Share of Common Stock (in usd per share)	$ 4.20	$ 1.29

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Debt - Debt Issuances And Repayments (Details) - USD ($) $ in Millions			3 Months Ended
	Mar. 29, 2023	Mar. 15, 2023	Mar. 31, 2023	Mar. 31, 2022	Apr. 19, 2023
Debt Instrument [Line Items]
Issuance of debt			$ 2,488	$ 0
Senior Notes Due December 2027 And June 2033 | Senior Notes
Debt Instrument [Line Items]
Issuance of debt	$ 1,250
Redemption price, percent	101.00%
4.950% Senior Notes Due December 2027 | Senior Notes
Debt Instrument [Line Items]
Issuance of debt	$ 750
Debt interest rate	4.95%
5.300% Senior Notes Due June 2033 | Senior Notes
Debt Instrument [Line Items]
Issuance of debt	$ 500
Debt interest rate	5.30%
3.875% Senior Unsecured Notes Due March 2023 | Senior Notes | DCP LP
Debt Instrument [Line Items]
Debt interest rate		3.875%
Repayments of debt		$ 500
5.850% Junior Subordinated Notes due May 2043 | Junior Subordinated Notes | DCP LP | Subsequent Event
Debt Instrument [Line Items]
Debt interest rate					5.85%
Aggregate principal amount intended to be redeemed					$ 550

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Debt - Term Loan Agreement (Details) - Secured Debt - Term Loan Agreement - Line of Credit - USD ($) $ in Millions	Mar. 27, 2023	Mar. 31, 2023
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 1,500
Funding period	90 days
Debt to capitalization ratio	65.00%
Borrowings outstanding		$ 0

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Debt - Credit Facilities and Commercial Paper (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022	Jun. 23, 2022
Commercial Paper
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 5,000	$ 5,000
Revolving Credit Facility | The Facility | Line of Credit
Debt Instrument [Line Items]
Amount borrowed	0	0
Line of credit facility, maximum borrowing capacity	5,000	5,000	$ 5,000
Secured Debt | The Credit Agreement | Line of Credit | DCP LP
Debt Instrument [Line Items]
Amount borrowed	225	0
Line of credit facility, maximum borrowing capacity	1,400	1,400
Performance obligations secured by letters of credit and bank guarantees	2	10
Secured Debt | Securitization Facility | Line of Credit | DCP LP
Debt Instrument [Line Items]
Borrowings outstanding	$ 350	$ 40

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Guarantees (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Guarantor Obligations [Line Items]
Environmental accruals for known contaminations	$ 439	$ 434
Joint Venture Debt Obligation Guarantees | Other joint ventures and entities
Guarantor Obligations [Line Items]
Maximum potential amount of future payments under the guarantees	$ 83
Joint venture debt obligations, period (up to)	3 years
Indemnifications
Guarantor Obligations [Line Items]
Carrying amount of indemnifications	$ 134	137
Environmental accruals for known contaminations	105	$ 108
Facilities | Residual Value Guarantees
Guarantor Obligations [Line Items]
Maximum potential amount of future payments under the guarantees	514
Railcar and Airplane | Residual Value Guarantees
Guarantor Obligations [Line Items]
Maximum potential amount of future payments under the guarantees	$ 164
Railcar and Airplane | Residual Value Guarantees | Minimum
Guarantor Obligations [Line Items]
Lessee operating lease remaining lease term (up to)	5 years
Railcar and Airplane | Residual Value Guarantees | Maximum
Guarantor Obligations [Line Items]
Lessee operating lease remaining lease term (up to)	10 years

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Contingencies and Commitments (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total environmental accrual	$ 439	$ 434
Expected period to incur a substantial amount of expenditures	30 years
Performance Guarantee
Debt Instrument [Line Items]
Performance obligations secured by letters of credit and bank guarantees	$ 749

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Derivatives and Financial Instruments - Summary of Commodity Derivative Assets and Liabilities (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Assets
Liabilities	$ (2,889)	$ (1,594)
Effect of Collateral Netting	(1)	0
Liabilities
Assets	2,889	1,594
Effect of Collateral Netting	15	90
Not Designated as Hedging Instrument | Commodity Derivatives
Liabilities
Effect of Collateral Netting	14	90
Total
Assets	3,088	1,860
Liabilities	(3,005)	(1,896)
Net Carrying Value Presented on the Balance Sheet	97	54
Not Designated as Hedging Instrument | Commodity Derivatives | Prepaid expenses and other current assets
Assets
Assets	3,008	1,331
Liabilities	(2,834)	(1,110)
Effect of Collateral Netting	(1)	0
Net Carrying Value Presented on the Balance Sheet	173	221
Not Designated as Hedging Instrument | Commodity Derivatives | Other assets
Assets
Assets	29	46
Liabilities	(4)	(1)
Effect of Collateral Netting	0	0
Net Carrying Value Presented on the Balance Sheet	25	45
Not Designated as Hedging Instrument | Commodity Derivatives | Other accruals
Liabilities
Assets	27	471
Liabilities	(144)	(750)
Effect of Collateral Netting	15	90
Net Carrying Value Presented on the Balance Sheet	(102)	(189)
Not Designated as Hedging Instrument | Commodity Derivatives | Other liabilities and deferred credits
Liabilities
Assets	24	12
Liabilities	(23)	(35)
Effect of Collateral Netting	0	0
Net Carrying Value Presented on the Balance Sheet	$ 1	$ (23)

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Derivatives and Financial Instruments - Summary of Gains/(Losses) From Commodity Derivatives (Details) - Commodity derivatives - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Net gain (loss) from commodity derivative activity	$ 173	$ (623)
Sales and other operating revenues
Derivative Instruments, Gain (Loss) [Line Items]
Net gain (loss) from commodity derivative activity	50	(420)
Other income (loss)
Derivative Instruments, Gain (Loss) [Line Items]
Net gain (loss) from commodity derivative activity	(14)	25
Purchased crude oil and products
Derivative Instruments, Gain (Loss) [Line Items]
Net gain (loss) from commodity derivative activity	$ 137	$ (228)

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Derivatives and Financial Instruments - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Cash collateral paid	$ 32	$ 93
Percentage of derivative contract volume expiring within twelve months	90.00%	90.00%

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Derivatives and Financial Instruments - Summary of Outstanding Commodity Derivative Contracts (Details) - Short - Commodity Derivative Assets bbl in Millions, Bcf in Millions	Mar. 31, 2023 bbl Bcf	Dec. 31, 2022 Bcf bbl
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels)
Derivative [Line Items]
Commodity | bbl	(37)	(25)
Natural gas (billions of cubic feet)
Derivative [Line Items]
Commodity | Bcf	(37,000)	(77,000)

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Fair Value Measurements - Summary of Fair Value of Derivative Assets and Liabilities and Effect of Counterparty Netting (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Assets
Total Fair Value of Gross Assets & Liabilities	$ 3,333	$ 2,107
Effect of Counterparty Netting	(2,889)	(1,594)
Effect of Collateral Netting	(1)	0
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	443	513
Liabilities
Total fair value gross liabilities	20,524	17,832
Effect of Counterparty Netting	(2,889)	(1,594)
Effect of Collateral Netting	(15)	(90)
Difference in Carrying Value and Fair Value	696	977
Net Carrying Value Presented on the Balance Sheet	18,316	17,125
Level 1
Assets
Total Fair Value of Gross Assets & Liabilities	3,159	1,861
Liabilities
Total fair value gross liabilities	2,883	1,676
Level 2
Assets
Total Fair Value of Gross Assets & Liabilities	157	224
Liabilities
Total fair value gross liabilities	17,639	16,151
Level 3
Assets
Total Fair Value of Gross Assets & Liabilities	17	22
Liabilities
Total fair value gross liabilities	2	5
Commodity Derivative Assets | Exchange-cleared instruments
Assets
Commodity Derivative Assets	2,992	1,748
Effect of Counterparty Netting	(2,867)	(1,582)
Effect of Collateral Netting	(1)	0
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	124	166
Liabilities
Commodity Derivative Liabilities	2,967	1,845
Effect of Counterparty Netting	(2,867)	(1,582)
Effect of Collateral Netting	(15)	(90)
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	85	173
Commodity Derivative Assets | OTC instruments
Assets
Commodity Derivative Assets	26	23
Effect of Counterparty Netting	0	0
Effect of Collateral Netting	0	0
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	26	23
Liabilities
Commodity Derivative Liabilities	4	9
Effect of Counterparty Netting	0	0
Effect of Collateral Netting	0	0
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	4	9
Commodity Derivative Assets | Physical forward contracts
Assets
Commodity Derivative Assets	70	89
Effect of Counterparty Netting	(22)	(12)
Effect of Collateral Netting	0	0
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	48	77
Liabilities
Commodity Derivative Liabilities	34	42
Effect of Counterparty Netting	(22)	(12)
Effect of Collateral Netting	0	0
Difference in Carrying Value and Fair Value	0	0
Net Carrying Value Presented on the Balance Sheet	12	30
Commodity Derivative Assets | Level 1 | Exchange-cleared instruments
Assets
Commodity Derivative Assets	2,914	1,615
Liabilities
Commodity Derivative Liabilities	2,883	1,676
Commodity Derivative Assets | Level 1 | OTC instruments
Assets
Commodity Derivative Assets	0	0
Liabilities
Commodity Derivative Liabilities	0	0
Commodity Derivative Assets | Level 1 | Physical forward contracts
Assets
Commodity Derivative Assets	0	0
Liabilities
Commodity Derivative Liabilities	0	0
Commodity Derivative Assets | Level 2 | Exchange-cleared instruments
Assets
Commodity Derivative Assets	76	130
Liabilities
Commodity Derivative Liabilities	82	164
Commodity Derivative Assets | Level 2 | OTC instruments
Assets
Commodity Derivative Assets	13	7
Liabilities
Commodity Derivative Liabilities	4	9
Commodity Derivative Assets | Level 2 | Physical forward contracts
Assets
Commodity Derivative Assets	68	86
Liabilities
Commodity Derivative Liabilities	34	42
Commodity Derivative Assets | Level 3 | Exchange-cleared instruments
Assets
Commodity Derivative Assets	2	3
Liabilities
Commodity Derivative Liabilities	2	5
Commodity Derivative Assets | Level 3 | OTC instruments
Assets
Commodity Derivative Assets	13	16
Liabilities
Commodity Derivative Liabilities	0	0
Commodity Derivative Assets | Level 3 | Physical forward contracts
Assets
Commodity Derivative Assets	2	3
Liabilities
Commodity Derivative Liabilities	0	0
Rabbi trust assets
Assets
Rabbi trust assets	179	126
Difference in Carrying Value and Fair Value	0	0
Rabbi trust assets | Level 1
Assets
Rabbi trust assets	179	126
Rabbi trust assets | Level 2
Assets
Rabbi trust assets	0	0
Rabbi trust assets | Level 3
Assets
Rabbi trust assets	0	0
Investment in NOVONIX
Assets
Rabbi trust assets	66	78
Difference in Carrying Value and Fair Value	0	0
Investment in NOVONIX | Level 1
Assets
Rabbi trust assets	66	78
Investment in NOVONIX | Level 2
Assets
Rabbi trust assets	0	0
Investment in NOVONIX | Level 3
Assets
Rabbi trust assets	0	0
Other investments
Assets
Rabbi trust assets		43
Difference in Carrying Value and Fair Value		0
Other investments | Level 1
Assets
Rabbi trust assets		42
Other investments | Level 2
Assets
Rabbi trust assets		1
Other investments | Level 3
Assets
Rabbi trust assets		0
Floating-rate debt
Liabilities
Debt	600	65
Difference in Carrying Value and Fair Value	0	0
Floating-rate debt | Net Carrying Value Presented on the Balance Sheet
Liabilities
Debt	600	65
Floating-rate debt | Level 1
Liabilities
Debt	0	0
Floating-rate debt | Level 2
Liabilities
Debt	600	65
Floating-rate debt | Level 3
Liabilities
Debt	0	0
Fixed-rate debt, excluding finance leases and software obligations
Liabilities
Debt	16,919	15,871
Difference in Carrying Value and Fair Value	696	977
Fixed-rate debt, excluding finance leases and software obligations | Net Carrying Value Presented on the Balance Sheet
Liabilities
Debt	17,615	16,848
Fixed-rate debt, excluding finance leases and software obligations | Level 1
Liabilities
Debt	0	0
Fixed-rate debt, excluding finance leases and software obligations | Level 2
Liabilities
Debt	16,919	15,871
Fixed-rate debt, excluding finance leases and software obligations | Level 3
Liabilities
Debt	$ 0	$ 0

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Fair Value Measurements - Narrative (Details) - Merger of DCP Midstream, LLC and Gray Oak Holdings LLC - USD ($) $ in Millions	Mar. 31, 2023	Aug. 17, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity investments	$ 2,215
Properties, plants and equipment	$ 12,850	$ 12,837

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Pension and Postretirement Plans - Summary of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Pension Benefits | U.S.
Components of Net Periodic Benefit Cost
Service cost	$ 27	$ 35
Interest cost	29	21
Expected return on plan assets	(31)	(39)
Amortization of net actuarial loss (gain)	3	6
Settlements	10	1
Net periodic benefit cost	38	24
Pension Benefits | Int’l.
Components of Net Periodic Benefit Cost
Service cost	3	8
Interest cost	8	6
Expected return on plan assets	(10)	(16)
Amortization of net actuarial loss (gain)	(1)	3
Settlements	0	0
Net periodic benefit cost	0	1
Other Benefits
Components of Net Periodic Benefit Cost
Service cost	1	1
Interest cost	2	1
Expected return on plan assets	0	0
Amortization of net actuarial loss (gain)	(2)	(1)
Settlements	0	0
Net periodic benefit cost	$ 1	$ 1

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Pension and Postretirement Plans - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)
U.S.
Defined Benefit Plan Disclosure [Line Items]
Company contributions to plans	$ 29
Additional contributions expected to be made during remainder of fiscal year	40
Int’l. | Pension Benefits
Defined Benefit Plan Disclosure [Line Items]
Company contributions to plans	5
Additional contributions expected to be made during remainder of fiscal year	$ 15

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Accumulated other comprehensive income (loss)
Beginning balance	$ 34,106	$ 21,637
Other comprehensive income (loss) before reclassifications	79	(78)
Other Comprehensive Income (Loss), Net of Income Taxes	87	(69)
Ending balance	34,916	22,121
Defined Benefit Plans
Accumulated other comprehensive income (loss)
Beginning balance	(122)	(398)
Other comprehensive income (loss) before reclassifications	2	4
Amounts reclassified from accumulated other comprehensive loss	8	9
Other Comprehensive Income (Loss), Net of Income Taxes	10	13
Ending balance	(112)	(385)
Foreign Currency Translation
Accumulated other comprehensive income (loss)
Beginning balance	(336)	(45)
Other comprehensive income (loss) before reclassifications	77	(82)
Amounts reclassified from accumulated other comprehensive loss	0	0
Other Comprehensive Income (Loss), Net of Income Taxes	77	(82)
Ending balance	(259)	(127)
Hedging
Accumulated other comprehensive income (loss)
Beginning balance	(2)	(2)
Other comprehensive income (loss) before reclassifications	0	0
Amounts reclassified from accumulated other comprehensive loss	0	0
Other Comprehensive Income (Loss), Net of Income Taxes	0	0
Ending balance	(2)	(2)
Accumulated Other Comprehensive Loss
Accumulated other comprehensive income (loss)
Beginning balance	(460)	(445)
Other Comprehensive Income (Loss), Net of Income Taxes	87	(69)
Ending balance	$ (373)	$ (514)

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Related Party Transactions (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Related Party Transactions [Abstract]
Operating revenues and other income	$ 1,304	$ 1,340
Purchases	3,699	4,681
Operating expenses and selling, general and administrative expenses	$ 72	$ 70

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Segment Disclosures and Related Information - Narrative (Details)	3 Months Ended
	Mar. 31, 2023 refinery
Midstream | NOVONIX Limited
Segment Reporting Information [Line Items]
Percent ownership of equity securities investment (as a percent)	16.00%
Chemicals | CPChem
Segment Reporting Information [Line Items]
Equity investment (as a percent)	50.00%
Refining Segment [Member] | Mainly United States And Europe
Segment Reporting Information [Line Items]
Number of refineries	12

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Segment Disclosures and Related Information - Analysis by Segment (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Segment Reporting Information [Line Items]
Sales and other operating revenues	$ 34,396	$ 36,179
Income (Loss) Before Income Taxes	2,651	828
Total Assets	77,262		$ 76,442
Midstream
Segment Reporting Information [Line Items]
Sales and other operating revenues	4,597	3,196
Refining Segment [Member]
Segment Reporting Information [Line Items]
Sales and other operating revenues	8,246	8,565
Marketing and Specialties
Segment Reporting Information [Line Items]
Sales and other operating revenues	21,544	24,413
Operating Segments | Midstream
Segment Reporting Information [Line Items]
Sales and other operating revenues	5,292	4,022
Income (Loss) Before Income Taxes	702	212
Total Assets	29,358		30,273
Operating Segments | Chemicals
Segment Reporting Information [Line Items]
Sales and other operating revenues	0	0
Income (Loss) Before Income Taxes	198	396
Total Assets	6,981		6,785
Operating Segments | Refining Segment [Member]
Segment Reporting Information [Line Items]
Sales and other operating revenues	22,341	24,141
Income (Loss) Before Income Taxes	1,608	173
Total Assets	22,750		21,581
Operating Segments | Marketing and Specialties
Segment Reporting Information [Line Items]
Sales and other operating revenues	22,399	25,211
Income (Loss) Before Income Taxes	426	296
Total Assets	9,443		9,939
Intersegment eliminations | Midstream
Segment Reporting Information [Line Items]
Sales and other operating revenues	(695)	(826)
Intersegment eliminations | Refining Segment [Member]
Segment Reporting Information [Line Items]
Sales and other operating revenues	(14,095)	(15,576)
Intersegment eliminations | Marketing and Specialties
Segment Reporting Information [Line Items]
Sales and other operating revenues	(855)	(798)
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Sales and other operating revenues	9	5
Income (Loss) Before Income Taxes	(283)	$ (249)
Total Assets	$ 8,730		$ 7,864

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Income Taxes (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Effective tax rate, percent	22.00%	21.00%

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DCP Midstream Class A Segment - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions		3 Months Ended
	Mar. 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Jan. 05, 2023
Merger With DCP LP
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Cash consideration (in dollars per share)				$ 41.75
Merger With DCP LP | Forecast
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Cash contributed		$ 3,800
DCP LP | Variable Interest Entity, Primary Beneficiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Economic interest (as a percent)	43.30%
Common unit, outstanding (in shares)	209,000		209,000
Number of shares to be issued (in shares)	91,000		91,000
Common units, distribution			$ 51
DCP LP | Variable Interest Entity, Primary Beneficiary | Merger With DCP LP | Minimum
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Economic interest percent after merger				43.30%
DCP LP | Variable Interest Entity, Primary Beneficiary | Merger With DCP LP | Maximum
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Economic interest percent after merger				86.80%
DCP LP | Enbridge Inc | Variable Interest Entity, Primary Beneficiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Economic interest acquired	23.36%		23.36%
DCP LP | Series B Preferred Stock | Variable Interest Entity, Primary Beneficiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Preferred units, liquidation preference	$ 161		$ 161
Preferred units, distribution			$ 3
Preferred units, outstanding (in shares)	6,450		6,450
DCP LP | Series C Preferred Stock | Variable Interest Entity, Primary Beneficiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Preferred units, liquidation preference	$ 110		$ 110
Preferred units, distribution			$ 2
Preferred units, outstanding (in shares)	4,400		4,400
DCP Midstream Class A Segment | Variable Interest Entity, Primary Beneficiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of shares held by LLC (in shares)	118,000		118,000

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DCP Midstream Class A Segment - Schedule of Assets and Liabilities (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Accounts and notes receivable	$ 9,326	$ 10,985
DCP LP | Variable Interest Entity, Primary Beneficiary
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Accounts and notes receivable	713	988
Net properties, plants and equipment	9,280	9,297
Investments in unconsolidated affiliates	2,182	2,161
Accounts payable	755	1,239
Short-term debt	4	504
Long-term debt	$ 4,808	$ 4,248

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Phillips 66 Partners LP (Details) - Acquisition Of Phillips 66 Partners Common Units Held By Public	Mar. 09, 2022 shares
Subsidiary or Equity Method Investee [Line Items]
Number of shares to be issued (in shares)	41,800,000
Number of shares issued per acquiree share (in shares)	0.50

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Restructuring (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 35
Variable Interest Entity, Not Primary Beneficiary | DCP LP
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 12