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FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS
RECURRING FAIR VALUE MEASUREMENTS
Our assets and liabilities measured at fair value on a recurring basis consist of derivative instruments and investment securities.
20232022
Level 1Level 2Level 3Net BalanceLevel 1Level 2Level 3Net Balance
Assets   
Derivatives
$— $34 $— $34 $— $18 $— $18 
Investment securities1,040 — 2 1,042 748 — — 748 
Total assets1,040 34 2 1,076 748 18 — 766 
Liabilities   
Derivatives
— (76)— (76)— (86)— (86)
Total liabilities$— $(76)$— $(76)$— $(86)$— $(86)
20232022
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Investment securities (1)
   
Non-U.S. debt securities (2)
$66 $1 $— $67 $— $— $— $— 
Equity securities527 451 (3)975 557 191 — 748 
Total$593 $452 $(3)$1,042 $557 $191 $— $748 
(1)Gains (losses) recorded to earnings related to these securities were $405 million, $(271) million and $(843) million for the years ended December 31, 2023, 2022, and 2021, respectively.
(2)As of December 31, 2023, our non-U.S. debt securities are classified as available for sale securities and mature within two years.
As of December 31, 2023 and 2022, the balance of our equity securities with readily determinable fair values is $975 million and $748 million, respectively, and is comprised mainly of our investment in ADNOC Drilling, and is recorded primarily in "All other current assets" in the consolidated statements of financial position. We measured our investments at fair value based on quoted prices in active markets.
Gains (losses) recorded to earnings for our equity securities with readily determinable fair values were $435 million, $(264) million, and $(843) million for the years ended December 31, 2023, 2022 and 2021, respectively. Gains (losses) related to our equity securities with readily determinable fair values are reported in "Other non-operating income (loss), net" in the consolidated statements of income (loss).
OTHER EQUITY INVESTMENTS
During the second quarter of 2023, certain equity securities without a readily determinable fair value were remeasured as of the date that an observable transaction occurred, which resulted in the Company recording a gain of $118 million. Gains (losses) related to our equity securities without readily determinable fair values are reported in "Other non-operating income (loss), net" in the consolidated statements of income (loss).
FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Our financial instruments include cash and cash equivalents, current receivables, certain investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments at December 31, 2023 and 2022 approximates their carrying value as reflected in our consolidated financial statements. For further information on the fair value of our debt, see "Note 9. Debt."
DERIVATIVES AND HEDGING
We use derivatives to manage our risks and do not use derivatives for speculation. The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
 20232022
Assets(Liabilities)Assets(Liabilities)
Derivatives accounted for as hedges
Currency exchange contracts
$10 $(3)$1 $— 
Interest rate swap contracts— (52)— (69)
Derivatives not accounted for as hedges
Currency exchange contracts and other
24 (21)17 (17)
Total derivatives$34 $(76)$18 $(86)
Derivatives are classified in the consolidated statements of financial position depending on their respective maturity date. As of December 31, 2023 and 2022, $31 million and $17 million of derivative assets are recorded in
"All other current assets" and $3 million and $1 million are recorded in "All other assets" in the consolidated statements of financial position, respectively. As of December 31, 2023 and 2022, $23 million and $17 million of derivative liabilities are recorded in "All other current liabilities" and $53 million and $69 million are recorded in "All other liabilities" in the consolidated statements of financial position, respectively.
FORMS OF HEDGING
Cash Flow Hedges
We use cash flow hedging primarily to mitigate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. In addition, we are exposed to interest rate risk fluctuations in connection with long-term debt that we issue from time to time to fund our operations. Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to as "Accumulated Other Comprehensive Income" or "AOCI") and are recorded in earnings in the period in which the hedged transaction occurs. See "Note 13. Equity" for further information on activity in AOCI for cash flow hedges. The maximum term of cash flow hedges that hedge forecasted transactions was approximately two years and one year at December 31, 2023 and 2022, respectively.
Fair Value Hedges
All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with certain debt. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.
As of December 31, 2023 and 2022, we had interest rate swaps with a notional amount of $500 million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk. As of July 1, 2023, the interest rate changed to be based on a Secured Overnight Financing Rate index. We concluded that the interest rate swap met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.
NOTIONAL AMOUNT OF DERIVATIVES
The notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. We disclose the derivative notional amounts on a gross basis to indicate the total counterparty risk but it does not generally represent amounts exchanged by us and the counterparties. A substantial majority of the outstanding notional amount of $4.2 billion and $3.8 billion at December 31, 2023 and 2022, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies.
COUNTERPARTY CREDIT RISK
Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.