Financial and Derivative Instruments

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Financial and Derivative Instruments

The company’s derivative instruments principally include crude oil, natural gas and refined product futures, swaps, options, and forward contracts. None of the company’s derivative instruments are designated as hedging instruments, although certain of the company’s affiliates make such a designation. The company’s derivatives are not material to the company’s consolidated financial position, results of operations or liquidity. The company believes it has no material market or credit risks to its operations, financial position or liquidity as a result of its commodities and other derivatives activities.

The company uses derivative commodity instruments traded on the New York Mercantile Exchange and on electronic platforms of the Inter-Continental Exchange and Chicago Mercantile Exchange. In addition, the company enters into swap contracts and option contracts principally with major financial institutions and other oil and gas companies in the “over-the-counter” markets, which are governed by International Swaps and Derivatives Association agreements and other master netting arrangements.

Derivative instruments measured at fair value at September 30, 2015, and December 31, 2014, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are as follows:

Consolidated Balance Sheet: Fair Value of Derivatives Not Designated as Hedging Instruments

(Millions of Dollars)

Type of Contract	Balance Sheet Classification	At September 30 2015		At December 31 2014
Commodity	Accounts and notes receivable, net	$	120	$	401
Commodity	Long-term receivables, net	5		12
Total Assets at Fair Value		$	125	$	413
Commodity	Accounts payable	$	71	$	57
Commodity	Deferred credits and other noncurrent obligations	4		27
Total Liabilities at Fair Value		$	75	$	84

Consolidated Statement of Income: The Effect of Derivatives Not Designated as Hedging Instruments

(Millions of dollars)

		Gain / (Loss) Three Months Ended September 30					Gain / (Loss) Nine Months ended September 30
Type of Contract	Statement of Income Classification	2015		2014			2015			2014
Commodity	Sales and other operating revenues	$	211	$	86		$	59		$	112
Commodity	Purchased crude oil and products	18		(16		)	19			(32		)
Commodity	Other income	5		(3		)	(6		)	(26		)
		$	234	$	67		$	72		$	54

The table below represents gross and net derivative assets and liabilities subject to netting agreements on the Consolidated Balance Sheet at September 30, 2015, and December 31, 2014.

Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities

(Millions of dollars)

	Gross Amount Recognized		Gross Amounts Offset		Net Amounts Presented		Gross Amounts Not Offset		Net Amount
At September 30, 2015
Derivative Assets	$	3,047	$	2,922	$	125	$	—	$	125
Derivative Liabilities	$	2,997	$	2,922	$	75	$	—	$	75
At December 31, 2014
Derivative Assets	$	4,004	$	3,591	$	413	$	7	$	406
Derivative Liabilities	$	3,675	$	3,591	$	84	$	—	$	84

Derivative assets and liabilities are classified on the Consolidated Balance Sheet as accounts and notes receivable, long-term receivables, accounts payable, and deferred credits and other noncurrent obligations. Amounts not offset on the Consolidated Balance Sheet represent positions that do not meet all the conditions for "a right of offset."