Financial Analysis

Business Combinations Refining Acquisition On October 1, 2025, we acquired the remaining 50% equity interest in WRB Refining LP (WRB) from subsidiaries of Cenovus Energy Inc. (Cenovus) for total cash consideration of $1.3 billion. This acquisition enables full integration with our broader value chain and expands our position in the Central Corridor region. The components of the fair value of the WRB acquisition consideration are: Millions of Dollars Cash paid to Cenovus $ 1,340 Fair value of previously held equity interest in WRB 1,304 Settlement of relationships with Phillips 66 and WRB 793 Total acquisition consideration $ 3,437 The acquisition date fair value of the previously held equity interest in WRB was determined using a market approach and the valuation resulted in a Level 3 nonrecurring fair value measurement. We accounted for this acquisition as a business combination and provisionally recorded $2,771 million of PP&E; $1,200 million of inventory; $54 million of other long-term assets; $9 million of intangibles; $450 million of short-term debt assumed at acquisition and also fully repaid on October 1, 2025; $87 million of net working capital deficit (excluding inventory and short-term debt); $34 million of AROs and accrued environmental costs; $21 million of other long-term liabilities; and $5 million of deferred income tax liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize the acc …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

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 st …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Debt Senior Notes and Term Loan Issuances and Repayments Repayments On February 17, 2026, upon maturity, Phillips 66 repaid the remaining $100 million outstanding on its 1.300% Senior Notes due February 2026, with an aggregate principal amount of $500 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. Term Loan Agreement On March 18, 2026 (the Term Loan Closing Date), Phillips 66 Company entered into a 364-day, $2.25 billion term loan agreement guaranteed by Phillips 66 (the Term Loan Agreement). The Term Loan Agreement provides for a single borrowing on the Term Loan Closing Date and matures 364 days after the Term Loan Closing Date. The Term Loan Agreement contains customary covenants similar to those contained in our revolving credit agreement, including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The Term Loan Agreement has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. We may at any time prepay outstanding borrowings under the Term Loan Agreement, in whole or in part, without premium or penalty. Outstanding borrowings under the Term Loan Agreement bear interest at either: (a) the term Secured Overnight Financing Rate (SOFR) in effect from time to time plus an applicable margin o …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following tables present our disaggregated sales and other operating revenues: Millions of Dollars Three Months Ended March 31 2026 2025 Product Line and Services Refined petroleum products and renewable fuels $ 24,878 22,249 Crude oil resales 4,324 3,102 Natural gas liquids and natural gas 4,541 4,506 Services and other * (1,203) 573 Consolidated sales and other operating revenues $ 32,540 30,430 Geographic Location** United States $ 25,790 24,159 United Kingdom 3,774 2,962 Germany 709 1,218 Other countries 2,267 2,091 Consolidated sales and other operating revenues $ 32,540 30,430 * Includes economic hedging losses associated with derivatives-related activities. See Note 13Derivatives and Financial Instruments, for additional information. ** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues. …

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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 …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes Our effective income tax rate for the three months ended March 31, 2026, was 16%, compared to 19% for the corresponding period of 2025. The decrease in our effective rate for the three months ended March 31, 2026, was primarily attributable to the impact of tax benefits from the vesting of share-based compensation awards and state income taxes on lower income before income taxes. The effective tax rate for the three months ended March 31, 2026, varied from the U.S. federal statutory income tax rate primarily due to tax benefits from the vesting of share-based compensation awards and state income taxes.

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Pension and Postretirement Plans The components of net periodic benefit cost for the three months ended March 31, 2026 and 2025, were as follows: Millions of Dollars Pension Benefits Other Benefits 2026 2025 2026 2025 U.S. Intl. U.S. Intl. Components of Net Periodic Benefit Cost Three Months Ended March 31 Service cost $ 34 2 31 3 Interest cost 32 9 32 8 2 2 Expected return on plan assets (41) (12) (38) (11) Amortization of net actuarial loss (gain) 3 4 (1) (1) Settlements 2 2 Net periodic benefit cost* $ 30 (1) 31 1 1 * Included within the Operating expenses and Selling, general and administrative expenses line items on our consolidated statement of income. During the three months ended March 31, 2026, we contributed $10 million to our U.S. pension and other postretirement benefit plan. We currently expect to make additional contributions of approximately $190 million to our U.S. pension and other postretirement benefit plans and approximately $4 million to our international pension plans during the remainder of 2026. Cash contributions are included within the Other line item of the Cash Flows From Operating Activities section of our consolidated statement of cash flows. …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Related Party Transactions Significant transactions with related parties were: Millions of Dollars Three Months Ended March 31 2026 2025 Operating revenues and other income (a)(d) $ 1,521 1,036 Purchases (b)(d) 563 4,010 Operating expenses and selling, general and administrative expenses (c) 71 74 (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, CF United LLC (CF United), and JET Management Holding. JET Management Holding is a newly formed entity, established in December 2025, in which we hold a 35% non-operating equity interest. We also sold certain feedstocks and intermediate products to 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 …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Sales and Other Operating Revenues Disaggregated Revenues The following tables present our disaggregated sales and other operating revenues: Millions of Dollars Three Months Ended March 31 2026 2025 Product Line and Services Refined petroleum products and renewable fuels $ 24,878 22,249 Crude oil resales 4,324 3,102 Natural gas liquids and natural gas 4,541 4,506 Services and other * (1,203) 573 Consolidated sales and other operating revenues $ 32,540 30,430 Geographic Location** United States $ 25,790 24,159 United Kingdom 3,774 2,962 Germany 709 1,218 Other countries 2,267 2,091 Consolidated sales and other operating revenues $ 32,540 30,430 * Includes economic hedging losses associated with derivatives-related activities. See Note 13Derivatives and Financial Instruments, for additional information. ** Sales and other operating revenues are attributable to countries based on the location of the operations generating the revenues. Contract-Related Assets and Liabilities At March 31, 2026, and December 31, 2025, receivables from contracts with customers were $9,250 million and $7,781 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, w …

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"Segment Disclosures and Related Information Our operating segments are: 1) Midstream Provides crude oil and refined petroleum product transportation, terminaling and storage services, as well as natural gas and NGL gathering, processing, transportation, fractionation, storage 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 10 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, business transformation restructuring costs, our investment in NOVONIX, and various other corporate activities. Corporate …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing