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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			June 30, 2025


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

For the transition period from


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 404,124,265 shares of common stock, $0.01 par value, outstanding as of June 30, 2025.

Table of Contents

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			6
Notes to Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			40

Item 3. Quantitative and Qualitative Disclosures About Market Risk			74

Item 4. Controls and Procedures			74

Part II – Other Information

Item 1. Legal Proceedings			75

Item 1A. Risk Factors			76

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			76

Item 5. Other Information			76

Item 6. Exhibits			77

Signatures			78

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


Consolidated Statement of Income			Phillips 66


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024		2025	2024
Revenues and Other Income
Sales and other operating revenues	$	33,323	38,129		63,753	73,940
Equity in earnings of affiliates	153		487		306	1,015
Net gain (loss) on dispositions	(93)		237		994	237
Other income	139		58		195	155
Total Revenues and Other Income	33,522		38,911		65,248	75,347

Costs and Expenses
Purchased crude oil and products	29,077		34,628		56,737	67,014
Operating expenses	1,440		1,407		3,062	2,859
Selling, general and administrative expenses	582		552		1,101	1,109
Depreciation and amortization	816		497		1,607	1,001
Impairments	4		225		30	390
Taxes other than income taxes	218		49		451	214
Accretion on discounted liabilities	10		10		22	19
Interest and debt expense	264		231		485	458
Foreign currency transaction (gains) losses	(9)		1		(15)	8
Total Costs and Expenses	32,402		37,600		63,480	73,072
Income before income taxes	1,120		1,311		1,768	2,275
Income tax expense	212		291		334	494
Net Income	908		1,020		1,434	1,781
Less: net income attributable to noncontrolling interests	31		5		70	18
Net Income Attributable to Phillips 66	$	877	1,015		1,364	1,763

Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
Basic	$	2.15	2.39		3.33	4.13
Diluted	2.15		2.38		3.32	4.10



Weighted-Average Common Shares Outstanding (thousands)
Basic	406,763		422,869		407,966	425,914
Diluted	407,929		425,734		409,448	428,993
See Notes to Consolidated Financial Statements.

Table of Contents


Consolidated Statement of Comprehensive Income			Phillips 66


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024		2025	2024

Net Income	$	908	1,020		1,434	1,781
Other comprehensive income (loss)
Defined benefit plans

Amortization of net actuarial loss and settlements	4		5		9	7
Plans sponsored by equity affiliates	1		—		3	1
Income taxes on defined benefit plans	(2)		(1)		(3)	(2)
Defined benefit plans, net of income taxes	3		4		9	6
Foreign currency translation adjustments	196		(1)		286	(35)
Income taxes on foreign currency translation adjustments	(4)		—		(6)	2
Foreign currency translation adjustments, net of income taxes	192		(1)		280	(33)




Other Comprehensive Income (Loss), Net of Income Taxes	195		3		289	(27)
Comprehensive Income	1,103		1,023		1,723	1,754
Less: comprehensive income attributable to noncontrolling interests	31		5		70	18
Comprehensive Income Attributable to Phillips 66	$	1,072	1,018		1,653	1,736

See Notes to Consolidated Financial Statements.

Table of Contents


Consolidated Balance Sheet			Phillips 66


	Millions of Dollars
	June 30 2025		December 31 2024
Assets
Cash and cash equivalents	$	1,052	1,738
Accounts and notes receivable (net of allowances of $70 million in 2025 and 2024)	9,762		9,544
Accounts and notes receivable—related parties	1,576		1,489
Inventories	5,583		3,995
Prepaid expenses and other current assets	1,478		1,144
Assets held for sale	1,625		—
Total Current Assets	21,076		17,910
Investments and long-term receivables	13,268		14,378
Net properties, plants and equipment	36,683		35,264
Goodwill	1,433		1,575
Intangibles	1,060		1,161
Other assets	2,422		2,294
Total Assets	$	75,942	72,582

Liabilities
Accounts payable	$	10,182	9,792
Accounts payable—related parties	669		512
Short-term debt	3,735		1,831
Accrued income and other taxes	1,535		1,060
Employee benefit obligations	441		732
Other accruals	1,698		1,160
Liabilities held for sale	1,425		—
Total Current Liabilities	19,685		15,087
Long-term debt	17,200		18,231
Asset retirement obligations and accrued environmental costs	983		1,129
Deferred income taxes	6,962		7,101
Employee benefit obligations	611		703
Other liabilities and deferred credits	1,874		1,868
Total Liabilities	47,315		44,119

Equity
Common stock (2,500,000,000 shares authorized at $0.01 par value) Issued (2025—658,261,193 shares; 2024—656,987,861 shares)
Par value	7		7
Capital in excess of par	19,820		19,788
Treasury stock (at cost: 2025—254,136,928 shares; 2024—248,594,923 shares)	(23,390)		(22,751)
Retained earnings	31,172		30,771
Accumulated other comprehensive loss	(118)		(407)
Total Stockholders’ Equity	27,491		27,408
Noncontrolling interests	1,136		1,055
Total Equity	28,627		28,463
Total Liabilities and Equity	$	75,942	72,582

See Notes to Consolidated Financial Statements.

Table of Contents


Consolidated Statement of Cash Flows			Phillips 66


	Millions of Dollars
	Six Months Ended June 30
	2025		2024
Cash Flows From Operating Activities
Net income	$	1,434	1,781
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	1,607		1,001
Impairments	30		390
Accretion on discounted liabilities	22		19
Deferred income taxes	(181)		(200)
Undistributed equity earnings	195		(359)
Loss on early redemption of debt	—		2
Net gain on dispositions	(994)		(237)

Unrealized investment loss	14		1

Other	52		(6)
Working capital adjustments
Accounts and notes receivable	(843)		935
Inventories	(1,607)		(2,800)
Prepaid expenses and other current assets	(426)		73
Accounts payable	1,075		1,558
Taxes and other accruals	654		(297)


Net Cash Provided by Operating Activities	1,032		1,861

Cash Flows From Investing Activities
Capital expenditures and investments	(1,010)		(995)
Acquisitions, net of cash acquired	(2,220)		—

Return of investments in equity affiliates	43		67
Proceeds from asset dispositions	2,031		687
Advances/loans—related parties	(20)		—
Collection of advances/loans—related parties	21		2

Other	12		(99)


Net Cash Used in Investing Activities	(1,143)		(338)

Cash Flows From Financing Activities
Issuance of debt	3,499		3,619
Repayment of debt	(2,375)		(3,020)
Issuance of common stock	25		64
Repurchase of common stock	(666)		(2,004)
Dividends paid on common stock	(956)		(933)
Distributions to noncontrolling interests	(95)		(33)


Contributions from noncontrolling interests	106		—
Other	(61)		(82)


Net Cash Used in Financing Activities	(523)		(2,389)

Effect of Exchange Rate Changes on Cash and Cash Equivalents	40		(13)

Net Change in Cash and Cash Equivalents, including cash classified within Assets held for sale	(594)		(879)
Cash and cash equivalents at beginning of period	1,738		3,323
Cash and Cash Equivalents at End of Period, including cash classified within Assets held for sale	$	1,144	2,444

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	Millions of Dollars
	Six Months Ended June 30
	2025		2024
Reconciliation of Cash and Cash Equivalents at end of period
Cash and cash equivalents	$	1,052	2,444
Cash and cash equivalents included in Assets held for sale	92		—
Cash and cash equivalents at end of period, including cash classified within Assets held for sale	$	1,144	2,444

See Notes to Consolidated Financial Statements.

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Consolidated Statement of Changes in Equity			Phillips 66


	Millions of Dollars
	Three Months Ended June 30
	Attributable to Phillips 66
	Common Stock
	Par Value		Capital in Excess of Par	Treasury Stock	Retained Earnings	Accum. Other Comprehensive Loss	Noncontrolling Interests	Total

March 31, 2025	$	7	19,789	(22,995)	30,785	(313)	1,080	28,353
Net income	—		—	—	877	—	31	908
Other comprehensive income	—		—	—	—	195	—	195
Dividends paid on common stock ($1.20 per share)	—		—	—	(487)	—	—	(487)
Repurchase of common stock	—		—	(395)	—	—	—	(395)
Distributions to noncontrolling interests	—		—	—	—	—	(81)	(81)
Contributions from noncontrolling interests	—		—	—	—	—	106	106
Benefit plan activity	—		31	—	(3)	—	—	28
June 30, 2025	$	7	19,820	(23,390)	31,172	(118)	1,136	28,627

March 31, 2024	$	7	19,674	(20,489)	30,846	(312)	1,067	30,793
Net income	—		—	—	1,015	—	5	1,020
Other comprehensive income	—		—	—	—	3	—	3
Dividends paid on common stock ($1.15 per share)	—		—	—	(485)	—	—	(485)
Repurchase of common stock	—		—	(843)	—	—	—	(843)
Distributions to noncontrolling interests	—		—	—	—	—	(20)	(20)
Benefit plan activity	—		43	—	(4)	—	—	39
June 30, 2024	$	7	19,717	(21,332)	31,372	(309)	1,052	30,507


	Shares
	Three Months Ended June 30
	Common Stock Issued	Treasury Stock

March 31, 2025	658,173,402	250,591,516
Repurchase of common stock	—	3,545,412
Shares issued—share-based compensation	87,791	—

June 30, 2025	658,261,193	254,136,928

March 31, 2024	656,284,691	232,332,556
Repurchase of common stock	—	5,633,070
Shares issued—share-based compensation	250,118	—

June 30, 2024	656,534,809	237,965,626










See Notes to Consolidated Financial Statements.

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	Millions of Dollars
	Six Months Ended June 30
	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, 2024	$	7	19,788	(22,751)	30,771	(407)	1,055	28,463
Net income	—		—	—	1,364	—	70	1,434
Other comprehensive income	—		—	—	—	289	—	289
Dividends paid on common stock ($2.35 per share)	—		—	—	(956)	—	—	(956)
Repurchase of common stock	—		—	(639)	—	—	—	(639)
Distributions to noncontrolling interests	—		—	—	—	—	(95)	(95)
Contributions from noncontrolling interests	—		—	—	—	—	106	106
Benefit plan activity	—		32	—	(7)	—	—	25
June 30, 2025	$	7	19,820	(23,390)	31,172	(118)	1,136	28,627

December 31, 2023	$	7	19,650	(19,342)	30,550	(282)	1,067	31,650
Net income	—		—	—	1,763	—	18	1,781
Other comprehensive loss	—		—	—	—	(27)	—	(27)
Dividends paid on common stock ($2.20 per share)	—		—	—	(933)	—	—	(933)
Repurchase of common stock	—		—	(1,990)	—	—	—	(1,990)
Distributions to noncontrolling interests	—		—	—	—	—	(33)	(33)

Benefit plan activity	—		67	—	(8)	—	—	59
June 30, 2024	$	7	19,717	(21,332)	31,372	(309)	1,052	30,507


	Shares
	Six Months Ended June 30
	Common Stock Issued	Treasury Stock

December 31, 2024	656,987,861	248,594,923
Repurchase of common stock	—	5,542,005
Shares issued—share-based compensation	1,273,332	—
June 30, 2025	658,261,193	254,136,928

December 31, 2023	654,842,101	224,377,439
Repurchase of common stock	—	13,588,187
Shares issued—share-based compensation	1,692,708	—
June 30, 2024	656,534,809	237,965,626
See Notes to Consolidated Financial Statements.

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Notes to Consolidated Financial Statements			Phillips 66

Vers

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 2024 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2025, are not necessarily indicative of the results expected for the full year.

Note 2—Restructuring

Los Angeles Refinery

In October 2024, we announced our intention to cease operations and begin idling the facilities at our Los Angeles Refinery in the fourth quarter of 2025, and we are evaluating potential future uses of the property. As a result of this decision, the following impacts were recorded in our Refining segment:

•We assessed the Los Angeles Refinery asset group for impairment and concluded that the carrying value of the asset group was recoverable. However, the estimated useful lives of the Los Angeles Refinery assets were shortened to reflect the plan to cease operations and begin idling the assets in the fourth quarter of 2025, with the permitting processes for new uses at the Los Angeles Refinery beginning in the third quarter of 2025. As of June 30, 2025, the $769 million carrying value of the net properties, plants and equipment (PP&E) and intangible assets will be depreciated through the fourth quarter of 2025 to the estimated salvage value of $241 million. Total depreciation related to the Los Angeles Refinery assets for the three and six months ended June 30, 2025, was $265 million and $535 million, respectively, including $239 million and $485 million of accelerated depreciation, respectively. This accelerated depreciation is included within the “Depreciation and amortization” line item on our consolidated statement of income for the three and six months ended June 30, 2025.

•Our asset retirement obligations (AROs) at the Los Angeles Refinery were $291 million as of June 30, 2025, primarily reflecting asbestos abatement and decommissioning of assets. The estimation of asset retirement obligations requires significant judgment and is subject to changes in the underlying assumptions. Depreciation of the related capitalized asset retirement costs also will be recorded through the fourth quarter of 2025, and the amount for the three and six months ended June 30, 2025, is reflected in the depreciation discussed above.

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Note 3—Business Combinations

Midstream Acquisitions

On April 1, 2025, we acquired all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, together with their respective subsidiaries (collectively referred to herein as Coastal Bend), which own various long haul natural gas liquids (NGL) pipelines, fractionation facilities and distribution systems, for total consideration of $2.2 billion, net of cash acquired. For this acquisition, we provisionally recorded $2,226 million of PP&E; $4 million of other assets; $3 million of net working capital deficit (excluding cash); and $22 million of other long-term liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize the accounting for this acquisition.

On July 1, 2024, we acquired Pinnacle Midland Parent LLC (referred to herein as Dos Picos) to expand our natural gas gathering and processing operations in the Permian Basin for total cash consideration of $565 million. We finalized the valuation of the assets acquired and liabilities assumed during the three months ended June 30, 2025. For this acquisition, we recorded $325 million of PP&E, including finance lease right of use assets; $256 million of amortizable intangible assets, primarily customer relationships; $21 million of goodwill; $18 million of net working capital deficit; $13 million of AROs; and $6 million of finance lease liabilities.

Marketing and Specialties Acquisition

On October 1, 2024, we acquired a marketing business on the U.S. West Coast for total consideration of $68 million. These operations were acquired to support the placement of renewable diesel produced by the Rodeo Renewable Energy Complex (Rodeo Complex). For this acquisition, we provisionally recorded $20 million of amortizable intangible assets, primarily customer relationships; $62 million of PP&E, including finance lease right of use assets; $31 million of net working capital; and $45 million of finance lease liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize our accounting for this acquisition.

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Note 4—Sales and Other Operating Revenues

Disaggregated Revenues

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


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024	2025	2024
Product Line and Services
Refined petroleum products and renewable fuels	$	24,211	28,071	46,460	53,810
Crude oil resales	4,151		5,905	7,253	11,483
Natural gas liquids and natural gas	4,076		3,583	8,582	6,917
Services and other*	885		570	1,458	1,730
Consolidated sales and other operating revenues	$	33,323	38,129	63,753	73,940

Geographic Location**
United States	$	26,022	30,464	50,181	58,841
United Kingdom	3,389		3,207	6,351	7,097
Germany	1,309		1,370	2,527	2,673
Other countries	2,603		3,088	4,694	5,329
Consolidated sales and other operating revenues	$	33,323	38,129	63,753	73,940
* 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 June 30, 2025, and December 31, 2024, receivables from contracts with customers were $9,029 million and $8,615 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 June 30, 2025, and December 31, 2024, our asset balances related to such payments were $730 million and $643 million, respectively.

Our contract liabilities primarily represent advances from our customers prior to product or service delivery. At June 30, 2025, and December 31, 2024, contract liabilities were $208 million and $232 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 June 30, 2025, the remaining performance obligations related to these minimum volume commitment contracts amounted to $927 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 2036 with a weighted average remaining life of five years as of June 30, 2025.

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Note 5—Credit Losses

We are exposed to credit losses primarily through our sales of refined petroleum products, renewable fuels, renewable feedstocks, 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 June 30, 2025, and December 31, 2024, we reported $11,338 million and $11,033 million of accounts and notes receivable, respectively, net of allowances of $70 million for both periods. Based on an aging analysis at June 30, 2025, 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 accounts receivables sold under a securitization facility, as well as standby letters of credit. See Note 11—Debt, Note 12—Guarantees, and Note 13—Contingencies and Commitments, for more information on these off-balance sheet exposures.

Note 6—Inventories

Inventories consisted of the following:


	Millions of Dollars
	June 30 2025		December 31 2024

Crude oil and products	$	5,116	3,547
Materials and supplies	467		448
	$	5,583	3,995

Inventories valued on the last-in, first-out (LIFO) basis totaled $5,051 million and $3,443 million at June 30, 2025, and December 31, 2024, respectively. The estimated excess of current replacement cost over LIFO cost of inventories amounted to approximately $4.5 billion and $4.9 billion at June 30, 2025, and December 31, 2024, 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 liquidations did not have a material impact on net income for the three and six months ended June 30, 2025 and 2024.

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Note 7—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 trial 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 Supreme Court) denied Dakota Access’ writ of certiorari requesting the Supreme Court to review the trial court’s decision to order the EIS and vacate the easement. Therefore, the requirement to prepare the EIS stood. 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 in September 2023, the USACE published its draft EIS for public comment. The USACE identified five potential outcomes but did not indicate which one it preferred. The options comprise two “no action” alternatives where the USACE would deny an easement to Dakota Access and require it to shut down the pipeline and either remove the pipe from under Lake Oahe or allow the pipeline to be abandoned-in-place under the lake. The USACE also identified three “action” alternatives; two of them contemplate that the USACE would reissue the easement to Dakota Access under essentially the same terms as 2017 with either the same or a larger volume of oil allowed through the pipeline, while the third alternative would require decommissioning of the current pipeline and construction of a new line 39 miles upstream from the current location.

The public comment period concluded on December 13, 2023. The USACE plans to review the comments and issue its final EIS in early 2026. The Record of Decision will follow within 30 to 60 days after the issuance of the final EIS. The final EIS must be completed before the USACE can reauthorize the easement for the pipeline. If reauthorization occurs, new litigation challenging the reauthorization may be filed.

In October 2024, the Tribe filed another lawsuit against the USACE in federal district court in Washington, D.C., again challenging USACE’s allowance of pipeline operations while the EIS process proceeds. In this lawsuit, the Tribe purports to introduce new evidence regarding the pipeline’s proximity to a reservoir and attempts to relitigate arguments about the need for injunctive relief to support its position that the Supreme Court should halt pipeline operations. A consortium of 13 states has joined Dakota Access as intervenors. The consortium argues that the pipeline reduces pollution compared to other modes of transportation and that Dakota Access is integral to the health of regional energy and agriculture markets. The Tribe’s prior request for a shutdown was denied in May 2021. This latest lawsuit seeking a shutdown does not change the current deadline for the issuance of the final EIS. Motions to dismiss the latest lawsuit were filed by USACE, Dakota Access, and Intervenors and opposed by the Tribe. The parties are awaiting the district court’s decision. On March 19, 2025, the Tribe filed a notice in support of its latest lawsuit, indicating three additional facts for the district court to consider when making its ruling on the lawsuit. These facts relate to events regarding Energy Transfer LP’s conduct and third-party actions against it.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access. On April 1, 2024, Dakota Access’ wholly owned subsidiary repaid $1 billion aggregate principal amount of its outstanding senior notes upon maturity. We funded our 25% share of the repayment, or $250 million, with a capital contribution of $171 million in March 2024 and $79 million of distributions we elected not to receive from Dakota Access in the first quarter of 2024. At June 30, 2025, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $850 million.

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In addition, Phillips 66 Partners LP (Phillips 66 Partners), a wholly owned subsidiary of Phillips 66, and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the notes offering. 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 June 30, 2025, our 25% share of the maximum potential equity contributions under the CECU was approximately $215 million. If the pipeline is required to cease operations, it may have a material adverse effect on our results of operations and cash flows. Should operations cease and Dakota Access and ETCO not have sufficient funds to pay its expenses, we also could be required to support our 25% share of the ongoing expenses, including scheduled interest payments on the notes of approximately $10 million annually, in addition to the potential obligations under the CECU at June 30, 2025.

At June 30, 2025, the aggregate book value of our investments in Dakota Access and ETCO was $862 million.

OnCue Holdings, LLC (OnCue)

We hold a 50% interest in OnCue, a joint venture that owns and operates retail convenience stores. We fully guarantee various debt agreements of OnCue and our co-venturer does not participate in the guarantees. This entity is considered a variable interest entity (VIE) because our debt agreements resulted in OnCue not being exposed to all potential losses. We have determined that we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance. At June 30, 2025, our maximum exposure to loss was $251 million, which represented the book value of our investment in OnCue of $194 million and guaranteed debt obligations of $57 million.

Investment Dispositions

On January 31, 2025, we sold our 49% ownership interest in Coop Mineraloel AG (Coop) and settled the foreign currency forward contracts entered into in connection with the asset sale. We received cash proceeds of $1.2 billion, consisting of a sales price of $1.15 billion and a final dividend relating to financial year 2024 of $92 million from Coop that was paid on January 30, 2025. We recognized a before-tax gain of $1 billion associated with the sale in the “Net gain (loss) on dispositions” line item on our consolidated statement of income for the six months ended June 30, 2025, and is reported in our M&S segment. The final dividend of $92 million is included within the “Cash Flows from Operating Activities” section on our consolidated statement of cash flows.

On January 30, 2025, DCP Midstream, LP (DCP LP) sold its 25% ownership interest in Gulf Coast Express Pipeline LLC for cash proceeds of $853 million. We recognized a before-tax gain of $68 million, which is included in the “Net gain (loss) on dispositions” line item on our consolidated statement of income for the six months ended June 30, 2025, and is reported in our Midstream segment.

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Note 8—Properties, Plants and Equipment

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


	Millions of Dollars
	June 30, 2025				December 31, 2024
	Gross PP&E		Accum. D&A	Net PP&E	Gross PP&E	Accum. D&A	Net PP&E

Midstream	$	28,945	5,257	23,688	26,187	4,820	21,367
Chemicals	—		—	—	—	—	—
Refining	22,802		12,912	9,890	22,274	11,991	10,283
Marketing and Specialties	989		517	472	2,091	1,267	824
Renewable Fuels	3,734		1,716	2,018	3,716	1,669	2,047
Corporate and Other	1,671		1,056	615	1,688	945	743
	$	58,141	21,458	36,683	55,956	20,692	35,264

See Note 2—Restructuring, for information regarding our intention to cease operations and begin idling the facilities at our Los Angeles Refinery. See Note 3—Business Combinations, for information regarding our acquisitions in the Midstream and Marketing and Specialties segments. See Note 9—Impairments, for information regarding PP&E impairments. See Note 23—Assets Held for Sale, regarding the pending divestiture in our Marketing and Specialties segment.

Note 9—Impairments


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024	2025	2024

Midstream	$	—	225	—	284
Refining	3		—	4	105
Marketing & Specialties	1		—	1	—

Corporate and Other	—		—	25	1
Total impairments	$	4	225	30	390

For the three and six months ended June 30, 2024, we recorded before-tax impairments totaling $225 million and $390 million, respectively, which included before-tax impairments of $224 million reported in our Midstream segment related to certain gathering and processing assets in Texas. The six-month period of 2024 also included $163 million of before-tax impairments recorded in the first quarter of 2024 related to certain crude oil processing and logistics assets in California, of which $104 million was reported in our Refining segment and $59 million was reported in our Midstream segment.

These impairment charges are included within the “Impairments” line item on our consolidated statement of income. See Note 15—Fair Value Measurements, for additional information on the determination of fair value used to record these impairments.

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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 June 30					Six Months Ended June 30
	2025			2024			2025		2024
	Basic		Diluted	Basic	Diluted		Basic	Diluted	Basic	Diluted
Amounts Attributed to Phillips 66 Common Stockholders (millions):
Net Income Attributable to Phillips 66	877		877	1,015	1,015		1,364	1,364	1,763	1,763
Income allocated to participating securities	(2)		(1)	(3)	(1)		(5)	(3)	(5)	(2)

Net income available to common stockholders	$	875	876	1,012	1,014		1,359	1,361	1,758	1,761

Weighted-average common shares outstanding (thousands):	405,726		406,763	421,313	422,869		406,820	407,966	424,239	425,914
Effect of share-based compensation	1,037		1,166	1,556	2,865		1,146	1,482	1,675	3,079
Weighted-average common shares outstanding—EPS	406,763		407,929	422,869	425,734		407,966	409,448	425,914	428,993

Earnings Per Share of Common Stock (dollars)	$	2.15	2.15	2.39	2.38		3.33	3.32	4.13	4.10

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Note 11—Debt

Senior Notes and Term Loan Issuances and Repayments

Issuances

On February 28, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66. The senior unsecured notes issuance consisted of:

•$600 million aggregate principal amount of 5.250% Senior Notes due 2031 (2031 Notes).

•$400 million aggregate principal amount of 5.300% Senior Notes due 2033 (Additional 2033 Notes).

•$500 million aggregate principal amount of 5.650% Senior Notes due 2054 (2054 Notes).

Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024. Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on June 30, 2024.

Repayments

On June 27, 2025, DCP LP early redeemed the outstanding $525 million of its 5.375% Senior Notes due July 2025 with an aggregate principal amount of $825 million.

On February 18, 2025, upon maturity, Phillips 66 Partners repaid its 3.605% Senior Notes due February 2025 with an aggregate principal amount of $59 million.

On March 29, 2024, DCP LP early redeemed $300 million of its 5.375% Senior Notes due July 2025 at par with an aggregate principal amount of $825 million.

On March 4, 2024, Phillips 66 Company repaid $700 million of the $1.25 billion borrowed under its delayed draw term loan that matures in June 2026.

On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900% senior notes due February 2024 with an aggregate principal amount of $800 million.

Accounts Receivable Securitization

On September 30, 2024, Phillips 66 Company entered into a 364-day, $500 million accounts receivable securitization facility (the Receivables Securitization Facility). Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its receivables, together with related security and interests in the proceeds thereof, to its wholly owned subsidiary, Phillips 66 Receivables LLC (P66 Receivables), a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility. On April 1, 2025, Phillips 66 Company amended the Receivables Securitization Facility to, among other things, increase the maximum size of the Receivables Securitization Facility from $500 million to $1 billion. Under the Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain accounts receivable in an amount not to exceed $1 billion in the aggregate, and will secure its obligations with a pledge of undivided interests in such accounts receivable, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder. Accounts outstanding under the Receivables Securitization Facility accrue interest at an adjusted term Secured Overnight Financing Rate (SOFR) plus the applicable margin. In all instances, Phillips 66 Company retains the servicing of the accounts receivable transferred.

Sales of accounts receivable under the Receivables Securitization Facility meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet. P66 Receivables guarantees payment, in full, for accounts receivable sold to the purchasers. For the three months ended June 30, 2025, we sold $303 million of accounts receivable in exchange for a $303 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction. For the six months ended June 30, 2025, we sold $433 million in accounts receivable in exchange for cash proceeds of $130 million and a $303 million reduction in our

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borrowings under the Receivables Securitization Facility. We recognized immaterial charges associated with the transfer of financial assets, which are included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income during the three and six months ended June 30, 2025.

At June 30, 2025, we had utilized the full $1 billion capacity of our Receivable Securitization Facility from $303 million of sold accounts receivable not yet remitted to the purchaser and $697 million of outstanding borrowings, which is recognized within the “Short-term debt” line item on our consolidated balance sheet. At December 31, 2024, we had utilized the full $500 million capacity of our Receivables Securitization Facility from $125 million of sold accounts receivable not yet remitted to the purchaser and $375 million of outstanding borrowings. The outstanding borrowings at June 30, 2025, and December 31, 2024, were secured by approximately $4.5 billion and $4.6 billion of accounts receivable held by P66 Receivables at June 30, 2025, and December 31, 2024, respectively, which are included within the “Accounts and notes receivable” line item on our consolidated balance sheet.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On January 13, 2025, we entered into a $200 million uncommitted credit facility (the 2025 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2025 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2025 Uncommitted Facility has no commitment fees or compensating balance requirements. Outstanding borrowings under the 2025 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR plus the applicable margin, (b) the adjusted daily simple SOFR plus the applicable margin or (c) the base rate, in each case plus the applicable margin. Each borrowing matures six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At June 30, 2025, $200 million of borrowings were outstanding under the 2025 Uncommitted Facility.

On June 25, 2024, we entered into a $400 million uncommitted credit facility (the 2024 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor. The 2024 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities. The 2024 Uncommitted Facility has no commitment fees or compensating balance requirements. Outstanding borrowings under the 2024 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR, (b) the adjusted daily simple SOFR or (c) the reference rate, in each case plus the applicable margin. Each borrowing matures six months from the date of such borrowing. We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty. At June 30, 2025, and December 31, 2024, $400 million of borrowings were outstanding under the 2024 Uncommitted Facility.

On February 28, 2024, we entered into a new $5 billion revolving credit agreement (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of February 28, 2029. The Facility replaced our previous $5 billion revolving credit facility dated as of June 23, 2022, with Phillips 66 Company as the borrower and Phillips 66 as the guarantor, and the previous revolving credit facility was terminated. The Facility contains customary covenants similar to the previous revolving credit facility, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Facility 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 Facility, in whole or in part, without premium or penalty. We have the option to increase the overall capacity to $6 billion, subject to certain conditions. We also have the option to extend the scheduled maturity of the Facility for up to two additional one-year terms, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment. Outstanding borrowings under the Facility bear interest at either: (a) the adjusted term SOFR (as described in the Facility) in effect from time to time plus the applicable margin; or (b) the reference rate (as described in the Facility) plus the applicable margin. The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time. At June 30, 2025, and December 31, 2024, no amount had been drawn under the Facility.

Phillips 66 also has a $5 billion uncommitted commercial paper program for short-term working capital needs that is supported by the Facility. Commercial paper maturities are contractually limited to less than one year. At June 30, 2025, we had $1,349 million borrowings outstanding under this program, while at December 31, 2024, $435 million of commercial paper had been issued under this program.

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DCP Midstream Class A Segment

On March 15, 2024, DCP LP terminated its $1.4 billion credit facility and its accounts receivable securitization facility that previously provided for up to $350 million of borrowing capacity. In conjunction with the termination of these facilities, DCP LP repaid $25 million in borrowings outstanding under its $1.4 billion credit facility and $350 million of borrowings outstanding under its accounts receivable securitization facility during the three months ended March 31, 2024.

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Note 12—Guarantees

At June 30, 2025, 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 June 30, 2025. We also have residual value guarantees associated with railcar, airplane and truck leases with maximum potential future exposures totaling $176 million. These leases have remaining terms of one 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 7—Investments, Loans and Long-Term Receivables, for additional information regarding Dakota Access and the CECU.

At June 30, 2025, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to four years. The maximum potential future exposures under these guarantees were approximately $244 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 June 30, 2025, and December 31, 2024, the carrying amount of recorded indemnifications was $121 million and $125 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 June 30, 2025, and December 31, 2024, environmental accruals for known contamination of $98 million and $100 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.

Additionally, P66 Receivables has guaranteed all borrowings and receivables sold under our Receivables Securitization Facility. At June 30, 2025, $238 million of the sold accounts receivable remained uncollected, which represents our maximum potential future exposure under the guarantee associated with the Receivables Securitization Facility. See Note 11—Debt, for information regarding our Receivables Securitization Facility.

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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.

Other than with respect to the legal matters described herein, 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 Environmental Protection Agency (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 June 30, 2025, our total environmental accruals were $453 million, compared with $439 million at December 31, 2024. 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.

Propel Fuels Litigation

In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc. (Propel Fuels), a California company that distributes E85 and other alternative fuels through fueling kiosks. Ultimately, the parties were not able to reach an agreement and negotiations were terminated in August 2018. On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. In 2025, the Propel Court is expected to rule on motions filed by Propel Fuels seeking exemplary damages and attorneys’ fees. Propel Fuels asked the Propel Court to grant treble damages and Phillips 66 Company filed a brief in opposition to that request. A hearing on the exemplary damages was held on March 4, 2025. Also in 2025, the Propel Court is expected to rule on motions to be filed by Phillips 66 Company for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial. Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position. As a result of the jury verdict in October 2024, the Company recorded an accrual of $604.9 million during the third quarter of 2024, which was reported in the M&S segment. The accrued amount is reflected as “Other liabilities and deferred credits” on our consolidated balance sheet as of June 30, 2025, and December 31, 2024. However, it is reasonably possible that the estimate of the loss could change based on the progression of the case, including the appeals process. Because of the uncertainties associated with ongoing litigation, we are unable to estimate the range of reasonably possible loss that may be attributable to exemplary damages, if any, in excess of the amount accrued. If information were to become available that would allow us to reasonably estimate a range of potential exposure in an amount higher or lower than the amount already accrued, we would adjust our accrued liabilities accordingly. While Phillips 66 Company believes the jury verdict is not legally or factually supported and intends to pursue post-judgment remedies and file an appeal, there can be no assurances that such defense efforts will be successful. To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.

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 June 30, 2025, we had performance obligations secured by letters of credit and bank guarantees of $529 million related to various purchase and other commitments incident to the ordinary conduct of business.

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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” line item on our consolidated statement of income. Realized and unrealized gains and losses on foreign currency derivatives entered into in connection with our investment dispositions are reported in the “Net gain (loss) on dispositions” line item on our consolidated statement of income. Cash flows from all of our commodity derivative activity for the periods presented appear within the “Cash Flows from Operating Activities” 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 feedstocks, 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 feedstocks and renewable fuels, 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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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
	June 30, 2025					December 31, 2024
	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	$	4,078	(3,870)	—	208		1,021	(922)	—	99
Other assets	7		(5)	—	2		—	—	—	—
Liabilities
Other accruals	748		(946)	66	(132)		1,136	(1,226)	46	(44)
Other liabilities and deferred credits	118		(117)	4	5		60	(71)	16	5
Total	$	4,951	(4,938)	70	83		2,217	(2,219)	62	60

At June 30, 2025, and December 31, 2024, there was no material cash collateral received or 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 June 30			Six Months Ended June 30
	2025		2024		2025	2024

Sales and other operating revenues	$	149	29		84	(173)
Other income	54		30		68	68
Purchased crude oil and products	54		38		(122)	(218)
Net gain (loss) from commodity derivative activity	$	257	97		30	(323)

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 June 30, 2025, and December 31, 2024.

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	Open Position Long / (Short)
	June 30 2025	December 31 2024
Commodity
Crude oil, refined petroleum products, NGL and renewable feedstocks (millions of barrels)	(55)	(22)
Natural gas (billions of cubic feet)	(1)	(14)

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 June 30, 2025, and December 31, 2024.

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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.

When applicable, 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.

When applicable, we determine the fair value of foreign currency derivatives based on observable market data. Management’s best estimate of transaction dates may be used if relevant to the instrument valuation. The degree to which these inputs are observable in the forward markets determines whether the instruments are classified as Level 2 or 3.

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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 Limited (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
	June 30, 2025
	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	$	4,827	—	—	4,827	(4,730)	—	—	97

Physical forward contracts	—		119	5	124	(11)	—	—	113

Rabbi trust assets	143		—	—	143	N/A	N/A	—	143
Investment in NOVONIX	23		—	—	23	N/A	N/A	—	23

	$	4,993	119	5	5,117	(4,741)	—	—	376

Commodity Derivative Liabilities
Exchange-cleared instruments	$	4,800	—	—	4,800	(4,730)	(70)	—	—

Physical forward contracts	—		137	1	138	(11)	—	—	127
Foreign currency derivative	—		89	—	89	—	—	—	89
Floating-rate debt	—		3,196	—	3,196	N/A	N/A	—	3,196
Fixed-rate debt, excluding finance leases and software obligations	—		16,446	—	16,446	N/A	N/A	915	17,361
	$	4,800	19,868	1	24,669	(4,741)	(70)	915	20,773

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	Millions of Dollars
	December 31, 2024
	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	$	2,137	—	—	2,137	(2,111)	—	—	26
OTC instruments	—		7	—	7	—	—	—	7
Physical forward contracts	—		70	3	73	(7)	—	—	66

Rabbi trust assets	153		—	—	153	N/A	N/A	—	153
Investment in NOVONIX	36		—	—	36	N/A	N/A	—	36
Foreign currency derivative	—		67	—	67	N/A	N/A	—	67
	$	2,326	144	3	2,473	(2,118)	—	—	355

Commodity Derivative Liabilities
Exchange-cleared instruments	$	2,173	—	—	2,173	(2,111)	(62)	—	—

Physical forward contracts	—		45	1	46	(7)	—	—	39

Floating-rate debt	—		1,760	—	1,760	N/A	N/A	—	1,760
Fixed-rate debt, excluding finance leases and software obligations	—		16,913	—	16,913	N/A	N/A	1,020	17,933
	$	2,173	18,718	1	20,892	(2,118)	(62)	1,020	19,732

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. Foreign currency derivatives are recorded in the “Other accruals” line item on our consolidated balance sheet at June 30, 2025, and in the “Prepaid expenses and other current assets” line item at December 31, 2024. 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

Coastal Bend Acquisition

On April 1, 2025, we acquired and began consolidating the financial results of Coastal Bend, and accordingly, accounted for the business combination using the acquisition method of accounting, which requires Coastal Bend’s assets and liabilities to be recorded at fair value as of the acquisition date on our consolidated balance sheet.

The preliminary fair value of PP&E was $2,226 million. The preliminary fair value of these assets was determined primarily using the cost approach. The cost approach used assumptions for the current replacement cost of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence. This valuation resulted in Level 3 nonrecurring fair value measurements.

See Note 3—Business Combinations, for additional information on the transaction.

Equity Investments and PP&E

In the second quarter of 2024, we remeasured the carrying value of the net PP&E and equity investment in a Texas gathering and processing asset group to fair value. In the first quarter of 2024, we remeasured the carrying value of the net PP&E of certain crude oil and processing and logistics assets in California to fair value. For both assessments, fair value was determined using a market approach. These valuations resulted in Level 3 nonrecurring fair value measurements.

See Note 9—Impairments, for additional information regarding before-tax impairments recorded in 2024.

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Note 16—Pension and Postretirement Plans

The components of net periodic benefit cost for the three and six months ended June 30, 2025 and 2024, were as follows:


	Millions of Dollars
	Pension Benefits					Other Benefits
	2025			2024		2025	2024
	U.S.		Int’l.	U.S.	Int’l.
Components of Net Periodic Benefit Cost
Three Months Ended June 30
Service cost	$	30	3	29	4	1	—
Interest cost	32		10	29	8	2	2
Expected return on plan assets	(38)		(12)	(39)	(11)	—	—

Amortization of net actuarial loss (gain)	4		(1)	3	—	(2)	(1)
Settlements	2		—	3	—	—	—
Net periodic benefit cost*	$	30	—	25	1	1	1

Six Months Ended June 30
Service cost	$	61	6	58	7	1	1
Interest cost	64		18	57	16	4	4
Expected return on plan assets	(76)		(23)	(77)	(22)	—	—

Amortization of net actuarial loss (gain)	8		(1)	6	—	(3)	(2)
Settlements	4		—	4	—	—	—
Net periodic benefit cost*	$	61	—	48	1	2	3
* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.

During the six months ended June 30, 2025, we contributed $56 million to our U.S. pension and other postretirement benefit plans and $3 million to our international pension plans. We currently expect to make additional contributions of approximately $107 million to our U.S. pension and other postretirement benefit plans and approximately $3 million to our international pension plans during the remainder of 2025. Cash contributions are included in the “Other” line item of the “Cash Flows From Operating Activities” section of our consolidated statement of cash flows.

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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, 2024	$	(140)	(262)	(5)	(407)
Other comprehensive income before reclassifications	2		292	—	294
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss and settlements	7		—	—	7
Foreign currency translation**	—		(12)	—	(12)
Hedging	—		—	—	—
Net current period other comprehensive income	9		280	—	289
June 30, 2025	$	(131)	18	(5)	(118)

December 31, 2023	$	(120)	(157)	(5)	(282)
Other comprehensive income (loss) before reclassifications	1		(33)	—	(32)
Amounts reclassified from accumulated other comprehensive loss
Defined benefit plans*
Amortization of net actuarial loss and settlements	5		—	—	5
Foreign currency translation	—		—	—	—
Hedging	—		—	—	—
Net current period other comprehensive income (loss)	6		(33)	—	(27)

June 30, 2024	$	(114)	(190)	(5)	(309)
* Included in the computation of net periodic benefit cost. See Note 16—Pension and Postretirement Plans, for additional information.
** Included in the gain on sale of Coop, recognized in the “Net gain (loss) on dispositions” line item on our consolidated statement of income. See Note 7—Investments, Loans and Long-Term Receivables, for additional information.

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Note 18—Cash Flow Information


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024	2025	2024



Non-cash financing activities
Reduction in borrowings under Receivables Securitization Facility	$	303	—	303	—

See Note 11—Debt, for additional information regarding the above non-cash activity.

Note 19—Related Party Transactions

Significant transactions with related parties were:


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024		2025	2024

Operating revenues and other income (a)	$	1,074	1,188		2,110	2,321
Purchases (b)	4,110		5,188		8,120	10,419
Operating expenses and selling, general and administrative expenses (c)	79		77		153	146

(a)We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the M&S segment, including OnCue and CF United LLC (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 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.

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Note 20—Segment Disclosures and Related Information

Our operating segments are:

1)Midstream—Provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and NGL transportation, storage, fractionation, gathering, processing and marketing services in the United States. In addition, this segment exports liquefied petroleum gas to global markets.

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 and distillates, including aviation fuels. This segment includes 11 refineries in the United States and Europe.

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

5)Renewable Fuels—Processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.

Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, our investment in NOVONIX, and various other corporate activities. Corporate assets include all cash, cash equivalents, income tax-related assets and enterprise information technology assets.

Intersegment sales are at prices that we believe approximate market.

Through our implementation of ASU No. 2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures,” we are including additional disclosures regarding significant segment expenses regularly provided to our chief operating decision maker (CODM), who is our Chief Executive Officer. The measure of segment profit or loss reviewed by our CODM is “income (loss) before income taxes.” The CODM uses segment income (loss) before income taxes to allocate resources to each segment predominantly in the annual budgeting and forecasting process. The CODM compares budget-to-actual segment income (loss) before income taxes on a monthly and quarterly basis and considers trend analyses as well as other market factors when making decisions about allocating capital and personnel to the segments. The measure of segment assets reported on our consolidated balance sheet reviewed by our CODM is “Total Assets.”

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Analysis of Results by Operating Segment


	Millions of Dollars
	Three Months Ended June 30, 2025
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	4,528	—	7,105	20,899	781	10	—	33,323
Intercompany revenues	528		—	11,589	518	834	2	(13,471)	—
Total sales and other operating revenues	5,056		—	18,694	21,417	1,615	12	(13,471)	33,323
Equity in earnings (losses) of affiliates	98		20	(2)	38	(1)	—	—	153
Net loss on dispositions	(4)		—	—	(89)	—	—	—	(93)
Other income	3		—	34	15	44	43	—	139
Total Revenues and Other Income	5,153		20	18,726	21,381	1,658	55	(13,471)	33,522

Costs and Expenses
Purchased crude oil and products	3,514		—	16,960	20,420	1,633	—	(13,450)	29,077
Operating expenses*	512		1	848	17	90	(7)	(21)	1,440
Selling, general and administrative expenses*	52		(1)	32	334	14	151	—	582
Depreciation and amortization	260		—	443	33	23	57	—	816
Impairments	—		—	3	1	—	—	—	4
Taxes other than income taxes	83		—	94	6	23	12	—	218
Interest and debt expense	—		—	—	—	—	264	—	264
Other segment items**	1		—	(13)	(1)	8	6	—	1
Total Costs and Expenses	4,422		—	18,367	20,810	1,791	483	(13,471)	32,402

Income (loss) before income taxes	$	731	20	359	571	(133)	(428)	—	1,120
* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.
** “Other segment items” for each reportable segment includes the following line items on our consolidated statement of income: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

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	Millions of Dollars
	Three Months Ended June 30, 2024
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	3,626	—	9,200	24,945	350	8	—	38,129
Intercompany revenues	720		—	13,899	580	1,151	4	(16,354)	—
Total sales and other operating revenues	4,346		—	23,099	25,525	1,501	12	(16,354)	38,129
Equity in earnings (losses) of affiliates	170		219	33	66	(1)	—	—	487
Net gain (loss) on dispositions	238		—	—	(1)	—	—	—	237
Other income	1		—	7	13	8	26	3	58
Total Revenues and Other Income	4,755		219	23,139	25,603	1,508	38	(16,351)	38,911

Costs and Expenses
Purchased crude oil and products	3,002		—	21,618	24,786	1,545	—	(16,323)	34,628
Operating expenses*	433		—	884	16	99	3	(28)	1,407
Selling, general and administrative expenses*	42		(3)	51	342	11	109	—	552
Depreciation and amortization	224		—	204	32	12	25	—	497
Impairments	225		—	—	—	—	—	—	225
Taxes other than income taxes	59		—	74	9	(104)	11	—	49
Interest and debt expense	—		—	—	—	—	231	—	231
Other segment items**	3		—	6	3	—	(1)	—	11
Total Costs and Expenses	3,988		(3)	22,837	25,188	1,563	378	(16,351)	37,600

Income (loss) before income taxes	$	767	222	302	415	(55)	(340)	—	1,311
* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.
** “Other segment items” for each reportable segment includes the following line items on our consolidated statement of income: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

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	Millions of Dollars
	Six Months Ended June 30, 2025
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	9,355	—	12,807	40,062	1,509	20	—	63,753
Intercompany revenues	1,159		—	21,762	996	1,615	4	(25,536)	—
Total sales and other operating revenues	10,514		—	34,569	41,058	3,124	24	(25,536)	63,753
Equity in earnings (losses) of affiliates	208		133	(107)	74	(2)	—	—	306
Net gain on dispositions	65		—	—	929	—	—	—	994
Other income	13		—	37	21	63	61	—	195
Total Revenues and Other Income	10,800		133	34,499	42,082	3,185	85	(25,536)	65,248

Costs and Expenses
Purchased crude oil and products	7,603		—	31,985	39,465	3,169	—	(25,485)	56,737
Operating expenses*	970		3	1,922	35	186	(3)	(51)	3,062
Selling, general and administrative expenses*	105		(3)	78	662	32	227	—	1,101
Depreciation and amortization	493		—	899	53	46	116	—	1,607
Impairments	—		—	4	1	—	25	—	30
Taxes other than income taxes	144		—	204	15	58	30	—	451
Interest and debt expense	—		—	—	—	—	485	—	485
Other segment items**	3		—	(15)	(2)	12	9	—	7
Total Costs and Expenses	9,318		—	35,077	40,229	3,503	889	(25,536)	63,480

Income (loss) before income taxes	$	1,482	133	(578)	1,853	(318)	(804)	—	1,768
* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.
** “Other segment items” for each reportable segment includes the following line items on our consolidated statement of income: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

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	Millions of Dollars
	Six Months Ended June 30, 2024
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Consolidating Adjustments	Total Consolidated
Revenues and Other Income
Third-party sales and other operating revenues	$	7,750	—	18,425	47,029	718	18	—	73,940
Intercompany revenues	1,437		—	26,583	1,098	1,926	7	(31,051)	—
Total sales and other operating revenues	9,187		—	45,008	48,127	2,644	25	(31,051)	73,940
Equity in earnings (losses) of affiliates	325		420	141	130	(1)	—	—	1,015
Net gain (loss) on dispositions	238		—	—	(1)	—	—	—	237
Other income	5		—	40	22	13	82	(7)	155
Total Revenues and Other Income	9,755		420	45,189	48,278	2,656	107	(31,058)	75,347

Costs and Expenses
Purchased crude oil and products	6,602		—	42,023	46,701	2,694	—	(31,006)	67,014
Operating expenses*	867		(2)	1,837	32	171	6	(52)	2,859
Selling, general and administrative expenses*	118		(5)	89	661	22	224	—	1,109
Depreciation and amortization	453		—	412	68	18	50	—	1,001
Impairments	284		—	105	—	—	1	—	390
Taxes other than income taxes	103		—	195	24	(138)	30	—	214
Interest and debt expense	—		—	—	—	—	458	—	458
Other segment items**	7		—	10	11	(1)	—	—	27
Total Costs and Expenses	8,434		(7)	44,671	47,497	2,766	769	(31,058)	73,072

Income (loss) before income taxes	$	1,321	427	518	781	(110)	(662)	—	2,275
* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.
** “Other segment items” for each reportable segment includes the following line items on our consolidated statement of income: “Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

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Other Segment Disclosures


	Millions of Dollars
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Total Consolidated
Three Months Ended June 30, 2025
Interest Income	$	—	—	—	—	—	34	34
Capital Expenditures and Investments*	384		—	148	34	9	12	587
Three Months Ended June 30, 2024
Interest Income	$	—	—	—	—	—	30	30
Capital Expenditures and Investments*	96		—	105	20	128	18	367
Six Months Ended June 30, 2025
Interest Income	$	—	—	—	—	—	68	68
Capital Expenditures and Investments*	600		—	324	49	18	19	1,010
Six Months Ended June 30, 2024
Interest Income	$	—	—	—	—	—	72	72
Capital Expenditures and Investments*	351		—	240	35	345	24	995
* Excludes Acquisitions, net of cash acquired.


	Millions of Dollars
	Operating Segments
	Midstream		Chemicals	Refining	M&S	Renewable Fuels	Corporate and Other	Total Consolidated
As of June 30, 2025
Investments In and Advances to Affiliates	$	2,228	7,890	2,279	553	14	2	12,966
Total Assets	30,187		7,890	21,443	10,665	3,008	2,749	75,942
As of December 31, 2024
Investments In and Advances to Affiliates	$	3,080	7,819	2,381	719	16	2	14,017
Total Assets	28,334		7,842	19,599	9,799	3,142	3,866	72,582

Note 21—Income Taxes

Our effective income tax rates for the three and six months ended June 30, 2025, were 19%, compared to 22% for the corresponding periods of 2024. The decrease in our effective rates for the three and six months ended June 30, 2025, were primarily attributable to the effects of state income taxes and the impact of foreign operations.

The effective tax rates for the three and six months ended June 30, 2025, varied from the U.S. federal statutory income tax rate primarily due to the impact of foreign operations and non-taxable items, partially offset by state income taxes.

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Note 22—DCP Midstream Class A Segment

DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP, its subsidiaries and its general partner entities. DCP LP is a master limited partnership whose operations include producing and fractionating NGL; gathering, compressing, treating and processing natural gas; recovering condensate; and transporting, trading, marketing and storing natural gas and NGL. DCP Midstream Class A Segment is a consolidated VIE as we are the primary beneficiary.

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
	June 30 2025		December 31 2024
Accounts receivable	$	610	638
Net properties, plants and equipment	8,987		8,861
Investments and long-term receivables	801		1,622
Accounts payable	954		909
Short-term debt	4		532
Long-term debt	2,910		2,913

See Note 7—Investments, Loans and Long-Term Receivables for additional information regarding the sale of DCP LP’s ownership interest in GCX. See Note 11—Debt for further information regarding DCP LP’s repayment of debt.

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Note 23—Assets Held for Sale

On May 15, 2025, we entered into a definitive agreement to divest 65% of our equity interest in our Germany and Austria retail marketing business (Germany and Austria Marketing) for expected pre-tax cash proceeds of approximately $1.6 billion (1.5 billion Euros), subject to purchase price adjustments for working capital and certain long-term liabilities on the closing date. We will retain a 35% non-operating equity interest in Germany and Austria Marketing through a new joint venture, which will be formed prior to the closing of the transaction. We expect to close this transaction in the second half of 2025, subject to regulatory approvals and other customary closing conditions.

In the second quarter of 2025, Germany and Austria Marketing, which is part of our M&S segment and reporting unit, met the held for sale criteria, and as of June 30, 2025, we reclassified the assets and liabilities to the “Assets held for sale” and “Liabilities held for sale” line items, respectively, on our consolidated balance sheet.

As of June 30, 2025, Germany and Austria Marketing has a net carrying value of approximately $200 million. The following table presents the carrying value of assets and liabilities as presented within “Assets held for sale” and “Liabilities held for sale” line items on our consolidated balance sheet.


	Millions of Dollars
Assets Held for Sale:	June 30, 2025
Cash and cash equivalents	$	92
Accounts and notes receivable	357
Inventories	95
Prepaid expenses and other current assets	40
Net properties, plant and equipment	420
Goodwill	141
Intangibles	93
Other assets	387
Total assets classified as held for sale	1,625

Liabilities Held for Sale:
Accounts payable	693
Accrued income and other taxes	41
Employee benefit obligations, current	4
Other accruals	77
Asset retirement obligations and accrued environmental costs	126
Deferred income taxes	22
Employee benefit obligations, non-current	128
Other liabilities and deferred credits	334
Total liabilities classified as held for sale	1,425

The goodwill allocated to Germany and Austria Marketing was derived from the goodwill balance of our M&S reporting unit and the amount allocated was based on the relative fair value of Germany and Austria Marketing compared to the fair value of the M&S reporting unit.

On May 15, 2025, we entered into foreign currency forward contracts in connection with our pending disposition, in which we sold an aggregate of approximately 1.5 billion Euros in exchange for an aggregate of approximately $1.6 billion. We recognized a before-tax aggregate unrealized loss of $89 million on these foreign currency forward contracts in the “Net gain (loss) on dispositions” line item on our consolidated statement of income for the three and six months ended June 30, 2025, which is reported in our M&S 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,” “priorities” and similar expressions often identify forward-looking statements, but the absence of these words does not mean a statement is not forward-looking. The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made. The company does not undertake to update, revise or correct any of the forward-looking information included in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events unless required to do so pursuant to applicable law. 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 term “earnings” as used in Management’s Discussion and Analysis refers to net income 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 uniquely positioned as a leading integrated downstream energy provider operating with Midstream, Chemicals, Refining, Marketing and Specialties (M&S), and Renewable Fuels segments. At June 30, 2025, we had total assets of $75.9 billion. Our common stock trades on the New York Stock Exchange under the symbol PSX.

Executive Overview

In the second quarter of 2025, we reported earnings of $877 million and cash provided by operating activities of $845 million. During the quarter, we funded capital expenditures and investments of $587 million and an acquisition of $2.2 billion, net of cash acquired. Additionally, we received $2.4 billion from net debt borrowings, paid $419 million to repurchase shares of our common stock and paid $487 million of dividends to our common stockholders. We ended the second quarter of 2025 with $1.1 billion of cash and cash equivalents and $3.7 billion of total committed capacity available under our credit facilities.

Strategic Priorities Update

In January 2025, we announced the next phase of priorities along with financial and operational initiatives through year-end 2027. With these targets, the company is continuing to focus on creating shareholder value; driving disciplined growth and returns; and maintaining financial strength and flexibility. We are focused on operational and cost reduction targets intended to drive world-class operations across our portfolio, while maintaining emphasis on growing our Midstream and Chemicals businesses.

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•Shareholder Returns – We believe shareholder value is enhanced through, among other things, a secure, competitive and growing dividend, complemented by share repurchases. Our financial target aims to return greater than 50% of net cash provided by operating activities to shareholders through share repurchases and dividends. The amount and timing of future dividend payments and the level and timing of future share repurchases is subject to the discretion of, and approval by, our Board of Directors and will depend on various factors including our share price, results of operations, financial condition and cash required for future business plans.

•In April and July 2025, our Board of Directors declared quarterly cash dividends of $1.20 per common share, reflecting our commitment to a secure, competitive and growing dividend.

•World-Class Operations – We are focused on achieving operational excellence by optimizing utilization rates and product yield at our refineries through reliable and safe operations, which will enable us to capture the value available in the market in terms of prices and margins. With our new targets, we remain focused on a competitive cost structure and plan to enhance Refining segment returns and increase our utilization rates by focusing on low-capital, higher-return projects that increase asset reliability and improve market capture.

•We continue to focus on Refining performance, targeting an annual clean product yield of greater than 86%, crude oil capacity utilization rates higher than industry average, and continuing to improve our competitive cost structure.

•Disciplined Growth and Returns – A disciplined capital allocation process ensures we invest in projects that are expected to generate competitive returns. Our strategy remains focused on growing our Midstream and Chemicals businesses. Within our Midstream segment, we are primarily focused on maximizing the value of our fully integrated natural gas liquids (NGL) wellhead-to-market value chain.

•On May 15, 2025, we entered into a definitive agreement to divest 65% of our equity interest in our Germany and Austria retail marketing business (Germany and Austria Marketing) for expected cash proceeds of approximately $1.6 billion (1.5 billion Euros), subject to purchase price adjustments for working capital and certain long-term liabilities on the closing date. We will retain a 35% non-operating equity interest in Germany and Austria Marketing through a joint venture, which will be formed prior to the closing of the transaction. We expect to complete this transaction in the second half of 2025, subject to regulatory approvals and other customary closing conditions.

•In January 2025, we closed on the sale of our 49% ownership in Coop Mineraloel AG (Coop) and DCP Midstream, LP’s (DCP LP) 25% ownership in Gulf Coast Express Pipeline LLC (GCX) and received total proceeds of $2 billion. We will continue to evaluate future opportunities to rationalize our asset portfolio. We have budgeted $2.1 billion for 2025 capital expenditures and investments, exclusive of acquisitions, which includes $1.1 billion of growth capital, primarily in our Midstream segment. See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information on the investment dispositions.

•We continued expansion of our Midstream NGL wellhead-to-market platform through acquiring all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP (collectively referred to herein as Coastal Bend), together with their respective subsidiaries, which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems. See Note 3—Business Combinations, in the Notes to Consolidated Financial Statements for additional information.

•Our new financial targets through 2027 reflect our plans to organically grow our Midstream and Chemicals businesses, as well as maintain total annual capital expenditures and investments of approximately $2 billion, excluding acquisitions.

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•Financial Strength and Flexibility – We use a variety of funding sources to support our liquidity requirements, including cash from operations, debt and proceeds from dispositions. Our focus remains on protecting the stable cash generation from the Midstream and M&S businesses while balancing continued portfolio optimization.

•We are targeting reductions of total debt to $17 billion and to lower our debt to capital ratio.

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Business Environment

Our Midstream segment includes our Transportation and natural gas liquids (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 Pipeline, LLC (DCP Sand Hills) and DCP Southern Hills Pipeline, LLC (DCP Southern Hills), contains both fee-based operations and operations directly impacted by NGL and natural gas prices. The weighted-average NGL price was $0.64 per gallon during the second quarter of 2025, compared with $0.68 per gallon during the second quarter of 2024. The Henry Hub natural gas price was $3.16 per million British thermal units (MMBtu) during the second quarter of 2025, compared with $2.04 per MMBtu during the second quarter of 2024. The decrease in NGL prices was primarily due to lower crude oil prices, while the increase in natural gas prices was due to increased liquified natural gas exports.

Our 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. The benchmark high-density polyethylene chain margin was 7.4 cents per pound in the second quarter of 2025, compared with 18.3 cents per pound in the second quarter of 2024. The decrease was mainly due to higher natural gas and ethane prices and lower polyethylene 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. Market crack spreads are used as indicators of refining margins and measure the difference between market prices for refined petroleum products and crude oil. The composite 3:2:1 market crack spread for our business increased to an average of $21.65 per barrel during the second quarter of 2025, from an average of $18.96 per barrel during the second quarter of 2024. The increase in the composite market crack spread was primarily driven by stronger year on year petroleum diesel demand, which has resulted in low seasonal inventories. The price of U.S. benchmark crude oil, West Texas Intermediate (WTI) at Cushing, Oklahoma, decreased to an average of $63.86 per barrel during the second quarter of 2025, from an average of $80.73 per barrel during the second quarter of 2024, primarily due to increased supply.

Results for our M&S segment depend largely on marketing fuel and lubricant margins and sales volumes of our refined 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 products in the regions and countries where we operate.

Our Renewable Fuels segment consists of the operations and assets of the Rodeo Renewable Energy Complex (Rodeo Complex), as well as the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels. Results for our Renewable Fuels segment are impacted by several factors, including the market price of renewable fuels, feedstock costs, throughput, operating costs and the value of certain regulatory credits, as well as other market factors, largely determined by the relationship between supply and demand.

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RESULTS OF OPERATIONS

Unless otherwise indicated, discussion of results for the three and six months ended June 30, 2025, is based on a comparison with the corresponding period of 2024.

Consolidated Results

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


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2025		2024		2025	2024

Midstream	$	731	767		1,482	1,321
Chemicals	20		222		133	427
Refining	359		302		(578)	518
Marketing and Specialties	571		415		1,853	781
Renewable Fuels	(133)		(55)		(318)	(110)
Corporate and Other	(428)		(340)		(804)	(662)
Income before income taxes	1,120		1,311		1,768	2,275
Income tax expense	212		291		334	494
Net income	908		1,020		1,434	1,781
Less: net income attributable to noncontrolling interests	31		5		70	18
Net income attributable to Phillips 66	$	877	1,015		1,364	1,763

Net income attributable to Phillips 66 in the second quarter of 2025 was $877 million, compared with $1,015 million in the second quarter of 2024. Net income attributable to Phillips 66 for the six months ended June 30, 2025, was $1,364 million, compared with $1,763 million for the six months ended June 30, 2024.

The decrease in net income attributable to Phillips 66 in the second quarter of 2025, was due to accelerated depreciation for the Los Angeles Refinery, lower equity earnings from CPChem and a gain on the sale of our ownership interest in Rockies Express Pipeline LLC (REX) that was recognized in 2024. These decreases were partially offset by higher U.S. and international marketing fuel margins, improved realized refining margins, primarily driven by higher market crack spreads, and a before-tax impairment of certain Midstream assets recognized in 2024.

The decrease in net income attributable to Phillips 66 the six months ended June 30, 2025, was due to lower realized refining margins, accelerated depreciation for the Los Angeles Refinery, and the gain on sale of our ownership interest in REX recognized in the second quarter of 2024, partially offset by a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in January 2025 and the before-tax impairment of certain Midstream assets recognized in the second quarter of 2024.

See the “Segment Results” section for additional information on our segment results and Note 21—Income Taxes, in the Notes to Consolidated Financial Statements for additional information on income taxes.

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Statement of Income Analysis

Sales and other operating revenues decreased 13% and 14% for the three and six months ended June 30, 2025, respectively. Purchased crude oil and products decreased 16% and 15% for the three and six months ended June 30, 2025, respectively. The decreases in both line items for the three months ended June 30, 2025, were due to lower prices for crude oil and refined petroleum products, as well as reduced marketing volumes, partially offset by higher refining volumes. The decreases in both line items for the six months ended June 30, 2025, were due to lower prices for crude oil and refined petroleum products.

Equity in earnings of affiliates decreased 69% and 70% for the three and six months ended June 30, 2025, respectively. The decreases for both periods of 2025 were primarily attributable to lower equity earnings from CPChem, as well as lower equity earnings from sales of ownership interests in REX, Coop and GCX. The decrease for the six months ended June 30, 2025, was additionally impacted by lower equity earnings from WRB, as a result of decreased margins. See the Chemicals segment analysis in the “Segment Results” section for additional information regarding CPChem. See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the sales of ownership interests.

We had a net loss on dispositions of $93 million for the second quarter of 2025, compared with a net gain on dispositions of $237 million in the second quarter of 2024. The decrease for the three months ended June 30, 2025, was due to a before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024 associated with the sale of our 25% ownership interest in REX, compared with a before-tax loss primarily associated with an aggregate unrealized loss of $89 million on foreign currency forward contracts entered into in connection with the pending divestiture of 65% of Germany and Austria Marketing recognized in the second quarter of 2025. Our net gain on dispositions increased $757 million for the six months ended June 30, 2025. The increase for the six months ended June 30, 2025, was primarily due to a before-tax gain of $1 billion associated with the sale of our investment in Coop recognized in the M&S segment in 2025, partially offset by the before-tax gain of $238 million recognized in the Midstream segment in the second quarter of 2024. See Note 7—Investments, Loans and Long-Term Receivables, in the Notes to Consolidated Financial Statements for additional information regarding the sale of Coop. See Note 23—Assets Held for Sale or Sold, in the Notes to Consolidated Financial Statements for additional information on the Germany and Austria Marketing pending divestiture.

Other income increased $81 million and $40 million for the three and six months ended June 30, 2025, respectively. The increase for the three months ended June 30, 2025, was primarily due to the recognition of Clean Fuel Production credits starting in 2025, as well as higher results from trading activities. The increase for the six months ended June 30, 2025, was primarily due to the recognition of Clean Fuel Production credits starting in 2025, partially offset by changes in the fair value of our investment in NOVONIX.

Operating expenses increased 2% and 7% for the three and six months ended June 30, 2025, respectively. The increase in the three months ended June 30, 2025, was primarily due to maintenance activity in the Midstream segment, partially offset by lower turnaround activity in the Refining segment. The increase in the six months ended June 30, 2025, was primarily due to higher turnaround activity in the Refining segment and increased maintenance activity in the Midstream segment.

Depreciation and amortization increased 64% and 61% for the three and six months ended June 30, 2025, respectively, primarily due to $239 million and $485 million of accelerated depreciation for the Los Angeles Refinery, respectively, as well as depreciation from the recent acquisition of Coastal Bend. See Note 2—Restructuring, in the Notes to Consolidated Financial Statements for information regarding our plans to cease operations and begin idling the facilities at our Los Angeles Refinery. See Note 3—Business Combinations, in the Notes to Consolidated Financial Statements for information regarding the Coastal Bend acquisition.

Impairments decreased $221 million and $360 million for the three and six months ended June 30, 2025, respectively. The decreases for both periods of 2025 were due to before-tax impairments of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas. The decrease for the six months ended June 30, 2025, also included $163 million of before-tax impairments recognized in the first quarter of 2024 related to certain crude oil processing and logistics assets in California. See Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information.

Taxes other than income taxes increased $169 million and $237 million for the three and six months ended June 30, 2025, respectively. The increases for both periods in 2025 were primarily driven by the expiration of the Biodiesel Blender Tax Credit as of December 31, 2024, as well as increased property taxes on certain Midstream assets. The increase for the six months ended June 30, 2025, was also impacted by an increase in taxes related to feedstock imports at the Rodeo Complex.

Interest and debt expense increased 14% and 6% for the three and six months ended June 30, 2025, respectively, primarily due to debt issuances related to an asset acquisition.

Income tax expense decreased 27% and 32% for the three and six months ended June 30, 2025, respectively, primarily due to lower income before income taxes. See Note 21—Income Taxes, in the Notes to Consolidated Financial Statements for information regarding our effective income tax rates.

Net income attributable to noncontrolling interests increased $26 million and $52 million for the three and six months ended June 30, 2025, respectively. The increase in the three months ended June 30, 2025, is due to higher results from DCP LP primarily driven by before-tax impairments of $224 million recognized in the second quarter of 2024 related to certain Midstream gathering and processing assets in Texas. The increase for the six months ended June 30, 2025, was also due to impacts from the gain on sale of DCP LP’s investment in GCX in January 2025. See Note 7—Investments, Loans and Long-Term Receivables and Note 9—Impairments, in the Notes to Consolidated Financial Statements for additional information regarding the sale of GCX and the before-tax impairments recorded in 2024, respectively.

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Segment Results

Midstream


	Three Months Ended June 30		Six Months Ended June 30
	2025	2024		2025	2024

	Millions of Dollars
Income Before Income Taxes
Transportation

Phillips 66 10-Q