Risk Management and Trading Activities (Tables)

9 Months Ended

Sep. 30, 2013

Pre-Tax Gains (Losses) from Trading Activities

Pre-tax unrealized and realized gains (losses) recorded in Income from discontinued operations in the Statement of Consolidated Income from trading activities amounted to the following:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013		2012
	(In millions)
Commodity	$	6		$	75	$	53	$	83
Foreign exchange		(1	)		1		—		3
Other		9			9		17		8
Total	$	14		$	85	$	70	$	94

Netting Arrangements on Physical and Financial Derivative Assets and Liabilities

The following table provides information about the effect of netting arrangements on the presentation of the Corporation’s physical and financial derivative assets and (liabilities) that are measured at fair value, with the effect of single counterparty multilateral netting being included in column (iv):

				Gross Amounts Offset in the Consolidated Balance Sheet						Net Amounts			Gross Amounts
	Gross Amounts			Physical Derivative and Financial Instruments			Cash Collateral*			Presented in the Consolidated Balance Sheet			Not Offset in the Consolidated Balance Sheet			Net Amounts
	(i)			(ii)			(ii)			(iii) = (i) + (ii)			(iv)			(v) = (iii) + (iv)
	(In millions)
September 30, 2013
Assets
Derivative contracts
Commodity	$	3,186		$	(2,530	)	$	(19	)	$	637		$	(30	)	$	607
Interest rate and other		62			(11	)		(4	)		47			(2	)		45
Counterparty netting		—			(80	)		—			(80	)		—			(80	)
Total derivative contracts	$	3,248		$	(2,621	)	$	(23	)	$	604		$	(32	)	$	572
September 30, 2013
Liabilities
Derivative contracts
Commodity	$	(3,320	)	$	2,530		$	99		$	(691	)	$	30		$	(661	)
Other		(12	)		11			—			(1	)		2			1
Counterparty netting		—			80			—			80			—			80
Total derivative contracts	$	(3,332	)	$	2,621		$	99		$	(612	)	$	32		$	(580	)
December 31, 2012
Assets
Derivative contracts
Commodity	$	3,253		$	(2,661	)	$	(34	)	$	558		$	(45	)	$	513
Interest rate and other		100			(8	)		—			92			(6	)		86
Counterparty netting		—			(81	)		—			(81	)		—			(81	)
Total derivative contracts	$	3,353		$	(2,750	)	$	(34	)	$	569		$	(51	)	$	518
Liabilities
Derivative contracts
Commodity	$	(3,312	)	$	2,661		$	5		$	(646	)	$	45		$	(601	)
Other		(10	)		8			—			(2	)		6			4
Counterparty netting		—			81			—			81			—			81
Total derivative contracts	$	(3,322	)	$	2,750		$	5		$	(567	)	$	51		$	(516	)

* There is no cash collateral that was not offset in the Consolidated Balance Sheet.

Gross and Net Fair Values of Corporate and Energy Marketing Risk Management and Trading Derivative Instruments

The table below reflects the gross and net fair values of the corporate and energy marketing risk management and trading derivative instruments:

	Accounts Receivable			Accounts Payable
	(In millions)
September 30, 2013
Derivative contracts designated as hedging instruments
Commodity	$	23		$	(5	)
Interest rate and other		40			(1	)
Total derivative contracts designated as hedging instruments		63			(6	)
Derivative contracts not designated as hedging instruments*
Commodity		3,163			(3,315	)
Foreign exchange		—			(1	)
Other		22			(10	)
Total derivative contracts not designated as hedging instruments		3,185			(3,326	)
Gross fair value of derivative contracts		3,248			(3,332	)
Master netting arrangements		(2,621	)		2,621
Cash collateral (received) posted		(23	)		99
Net fair value of derivative contracts	$	604		$	(612	)
December 31, 2012
Derivative contracts designated as hedging instruments
Commodity	$	65		$	(124	)
Interest rate and other		72			(2	)
Total derivative contracts designated as hedging instruments		137			(126	)
Derivative contracts not designated as hedging instruments*
Commodity		3,188			(3,188	)
Foreign exchange		14			—
Other		14			(8	)
Total derivative contracts not designated as hedging instruments		3,216			(3,196	)
Gross fair value of derivative contracts		3,353			(3,322	)
Master netting arrangements		(2,750	)		2,750
Cash collateral (received) posted		(34	)		5
Net fair value of derivative contracts	$	569		$	(567	)

* Includes trading derivatives and derivatives used for risk management.

Fair Values for Corporation's Net Physical Derivative and Financial Assets and (Liabilities)

The following table provides the Corporation’s net physical derivative and financial assets and (liabilities) that are measured at fair value based on this hierarchy:

	Level 1			Level 2			Level 3			Counterparty netting			Collateral			Balance
	(In millions)
September 30, 2013
Assets
Derivative contracts
Commodity	$	131		$	417		$	150		$	(42	)	$	(19	)	$	637
Interest rate and other		10			40			2			(1	)		(4	)		47
Collateral and counterparty netting		(32	)		(47	)		(1	)		—			—			(80	)
Total derivative contracts		109			410			151			(43	)		(23	)		604
Other assets measured at fair value on a recurring basis		8			—			—			—			—			8
Total assets measured at fair value on a recurring basis	$	117		$	410		$	151		$	(43	)	$	(23	)	$	612	(a)
Liabilities
Derivative contracts
Commodity	$	(75	)	$	(627	)	$	(130	)	$	42		$	99		$	(691	)
Other		—			(2	)		—			1			—			(1	)
Collateral and counterparty netting		32			47			1			—			—			80
Total derivative contracts		(43	)		(582	)		(129	)		43			99			(612	)
Other liabilities measured at fair value on a recurring basis		(22	)		—			—			—			—			(22	)
Total liabilities measured at fair value on a recurring basis	$	(65	)	$	(582	)	$	(129	)	$	43		$	99		$	(634	)(b)
Other fair value measurement disclosures Long-term debt	$	—		$	(6,606	)	$	—		$	—		$	—		$	(6,606	)

(a) Includes a total of $63 million of Commodity and Interest rate and other Level 2 assets that relate to the Corporation’s continuing operations.

(b) Includes $1 million of Commodity and Other Level 2 liabilities that relate to the Corporation’s continuing operations.

	Level 1			Level 2			Level 3			Counterparty netting			Collateral			Balance
	(In millions)
December 31, 2012
Assets
Derivative contracts
Commodity	$	94		$	445		$	243		$	(190	)	$	(34	)	$	558
Interest rate and other		6			86			1			(1	)		—			92
Collateral and counterparty netting		(23	)		(54	)		(4	)		—			—			(81	)
Total derivative contracts		77			477			240			(191	)		(34	)		569
Other assets measured at fair value on a recurring basis		5			49			—			(2	)		—			52
Total assets measured at fair value on a recurring basis	$	82		$	526		$	240		$	(193	)	$	(34	)	$	621
Liabilities
Derivative contracts
Commodity	$	(83	)	$	(657	)	$	(101	)	$	190		$	5		$	(646	)
Other		(1	)		(2	)		—			1			—			(2	)
Collateral and counterparty netting		23			54			4			—			—			81
Total derivative contracts		(61	)		(605	)		(97	)		191			5			(567	)
Other liabilities measured at fair value on a recurring basis		(40	)		(2	)		(2	)		2			—			(42	)
Total liabilities measured at fair value on a recurring basis	$	(101	)	$	(607	)	$	(99	)	$	193		$	5		$	(609	)
Other fair value measurement disclosures Long-term debt	$	—		$	(8,887	)	$	—		$	—		$	—		$	(8,887	)

Net Transfers into and out of Each Level of Fair Value Hierarchy

The following table provides net transfers into and out of each level of the fair value hierarchy:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Transfers into Level 1	$	18		$	85		$	(1	)	$	244
Transfers out of Level 1		15			(38	)		77			210
	$	33		$	47		$	76		$	454
Transfers into Level 2	$	(11	)	$	48		$	(103	)	$	(245	)
Transfers out of Level 2		(2	)		(131	)		16			(288	)
	$	(13	)	$	(83	)	$	(87	)	$	(533	)
Transfers into Level 3	$	(14	)	$	50		$	(12	)	$	100
Transfers out of Level 3		(6	)		(14	)		23			(21	)
	$	(20	)	$	36		$	11		$	79

Changes in Physical Derivatives and Financial Assets and (Liabilities) that are Measured at Fair Value Based on Level 3 Inputs

The following table provides changes in physical derivatives and financial assets and (liabilities) that are measured at fair value based on Level 3 inputs, which are all related to discontinued operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Balance at beginning of period	$	107		$	87		$	141		$	(143	)
Unrealized pre-tax gains (losses)
Included in earnings (a)		(61	)		(26	)		(122	)		(72	)
Included in other comprehensive income (loss) (b)		—			—			—			43
Purchases (c)		4			14			44			244
Sales (c)		(1	)		(9	)		(32	)		(266	)
Settlements (d)		(7	)		15			(20	)		232
Transfers into Level 3		(14	)		50			(12	)		100
Transfers out of Level 3		(6	)		(14	)		23			(21	)
Balance at end of period	$	22		$	117		$	22		$	117

(a) All of the unrealized pre-tax gains and losses included in earnings were reflected in Income from discontinued operations in the Statement of Consolidated Income.

(b) The unrealized pre-tax gains (losses) included in Other comprehensive income (loss) are reflected in the Change in fair value of cash flow hedges in the Statement of Consolidated Comprehensive Income.

(c) Purchases and sales primarily represent option premiums paid or received, respectively, during the reporting period and are reflected in Income from discontinued operations in the Statement of Consolidated Income.

(d) Settlements represent realized gains (losses) on derivatives settled during the reporting period and are reflected in Income from discontinued operations in the Statement of Consolidated Income.

Risk Management and Trading Activities

The significant unobservable inputs used in Level 3 fair value measurements for the Corporation’s physical commodity contracts and derivative instruments primarily include less liquid delivered locations for physical commodity contracts or volatility assumptions for out-of-the-money options. The following table provides information about the Corporation’s significant recurring unobservable inputs used in the Level 3 fair value measurements. Natural gas contracts are usually quoted and transacted using basis pricing relative to an active pricing location (e.g., Henry Hub), for which price inputs represent the approximate value of differences in geography and local market conditions. All other price inputs below represent full contract prices. Significant changes in any of the inputs below, independently or correlated, may result in a different fair value.

	Unit of Measurement	Range / Weighted Average
September 30, 2013
Assets
Commodity contracts with a fair value of $150 million (a) Contract prices
Crude oil and refined petroleum products	$ / bbl (c)		$ 71.23 - 163.44 / 113.54
Electricity	$ / MWH (d)		$ 23.80 - 102.25 / 37.09
Basis prices
Natural gas	$ / MMBTU (e)		$ (1.76) - 10.15 / 0.11
Contract volatilities
Crude oil and refined petroleum products	%		14.00 - 21.00 / 17.00
Natural gas	%		19.00 - 31.00 / 23.00
Electricity	%		16.00 - 29.00 / 23.00
September 30, 2013
Liabilities
Commodity contracts with a fair value of $130 million (b) Contract prices
Crude oil and refined petroleum products	$ / bbl (c)	$ 89.82 - 130.53 / 116.97
Electricity	$ / MWH (d)	$ 24.75 - 81.18 / 39.94
Basis prices
Natural gas	$ / MMBTU (e)	$ (1.75) - 10.15 / 0.73
Contract volatilities
Crude oil and refined petroleum products	%	14.00 - 21.00 / 16.00
December 31, 2012
Assets
Commodity contracts with a fair value of $243 million Contract prices
Crude oil and refined petroleum products	$ / bbl (c)	$79.35 -144.27 / 113.06
Electricity	$ / MWH (d)	$23.37 - 79.27 / 40.81
Basis prices
Natural gas	$ / MMBTU (e)	$ (0.47) - 6.66 / 0.39
Contract volatilities
Crude oil and refined petroleum products	%	23.00 - 27.00 / 26.00
Natural gas	%	21.00 - 36.00 / 25.00
Electricity	%	18.00 - 40.00 / 28.00
Liabilities
Commodity contracts with a fair value of $101 million Contract prices
Crude oil and refined petroleum products	$ / bbl (c)	$83.49 -133.38 / 109.94
Electricity	$ / MWH (d)	$25.01 - 72.60 / 40.38
Basis prices
Natural gas	$ / MMBTU (e)	$ (0.72) - 6.66 / 1.26
Contract volatilities
Crude oil and refined petroleum products	%	24.00 - 27.00 / 26.00
Natural gas	%	21.00 - 28.00 / 22.00

(a) Included in Assets held for sale.

(b) Included in Liabilities associated with assets held for sale.

(c) Price per barrel.

(d) Price per megawatt hour.

(e) Price per million British thermal unit.

Note: Fair value measurement for all recurring inputs was performed using a combination of income and market approach techniques.

Corporate Risk Management [Member]

Gross Volumes of Corporation's Derivative Instruments Outstanding

The gross volumes of the Corporate risk management derivative contracts outstanding were as follows:

	September 30, 2013		December 31, 2012
Commodity, primarily crude oil (millions of barrels)		8		1
Foreign exchange (millions of U.S. Dollars)	$	55	$	1,285
Interest rate swaps (millions of U.S. Dollars)	$	865	$	880

Energy Marketing Risk Management [Member]

Gross Volumes of Corporation's Derivative Instruments Outstanding

The gross volumes of the Corporation’s energy marketing commodity contracts outstanding were as follows:

	September 30, 2013		December 31, 2012
Crude oil and refined petroleum products (millions of barrels)		20		26
Natural gas (millions of mcf*)		4,032		2,938
Electricity (millions of megawatt hours)		238		278

* One mcf represents one thousand cubic feet.

Trading Activities [Member]

Gross Volumes of Corporation's Derivative Instruments Outstanding

The gross volumes of derivative contracts outstanding related to trading activities were as follows:

	September 30, 2013		December 31, 2012
Commodity
Crude oil and refined petroleum products (millions of barrels)		1,624		1,179
Natural gas (millions of mcf)		3,116		3,377
Electricity (millions of megawatt hours)		5		19
Foreign exchange (millions of U.S. Dollars)	$	89	$	412
Other
Interest rate (millions of U.S. Dollars)	$	49	$	167
Equity securities (millions of shares)		14		14