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Financial and Derivative Instruments
 12 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial and Derivative Instruments
Financial and Derivative Instruments
Derivative Commodity Instruments The company’s derivative commodity instruments principally include crude oil, natural gas and refined product futures, swaps, options, and forward contracts. None of the company’s derivative instruments is designated as a hedging instrument, although certain of the company’s affiliates make such designation. The company’s derivatives are not material to the company’s financial position, results of operations or liquidity. The company believes it has no material market or credit risks to its operations, financial position or liquidity as a result of its commodity derivative activities.
The company uses derivative commodity instruments traded on the New York Mercantile Exchange and on electronic platforms of the Inter-Continental Exchange and Chicago Mercantile Exchange. In addition, the company enters into swap contracts and option contracts principally with major financial institutions and other oil and gas companies in the “over-the-counter” markets, which are governed by International Swaps and Derivatives Association agreements and other master netting arrangements. Depending on the nature of the derivative transactions, bilateral collateral arrangements may also be required.
Derivative instruments measured at fair value at December 31, 2019, December 31, 2018, and December 31, 2017, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are below:
Consolidated Balance Sheet: Fair Value of Derivatives Not Designated as Hedging Instruments
 
 
 
 
 
At December 31

Type of Contract
Balance Sheet Classification
2019

 
 
2018

Commodity
Accounts and notes receivable, net
$
11

 
 
$
279

Commodity
Long-term receivables, net
—

 
 
4

Total assets at fair value
$
11

 
 
$
283

Commodity
Accounts payable
$
74

 
 
$
12

Commodity
Deferred credits and other noncurrent obligations
—

 
 
—

Total liabilities at fair value
$
74

 
 
$
12


Consolidated Statement of Income: The Effect of Derivatives Not Designated as Hedging Instruments
 
 
Gain/(Loss)
 
Type of Derivative
Statement of
Year ended December 31
 
Contract
Income Classification
2019

 
 
2018

 
2017

Commodity
Sales and other operating revenues
$
(291
)
 
 
$
135

 
$
(105
)
Commodity
Purchased crude oil and products
(17
)
 
 
(33
)
 
(9
)
Commodity
Other income
(2
)
 
 
3

 
(2
)
 
 
$
(310
)
 
 
$
105

 
$
(116
)

The table below represents gross and net derivative assets and liabilities subject to netting agreements on the Consolidated Balance Sheet at December 31, 2019 and December 31, 2018.
Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities
 
 
Gross Amounts Recognized

 
Gross Amounts Offset

 
Net Amounts Presented

 
 Gross Amounts Not Offset

 
Net Amounts

At December 31, 2019
 
 
 
 
 
Derivative Assets
 
$
656

 
$
645

 
$
11

 
$
—

 
$
11

Derivative Liabilities
 
$
719

 
$
645

 
$
74

 
$
—

 
$
74

At December 31, 2018
 
 
 
 
 
 
 
 
 
 
Derivative Assets
 
$
3,685

 
$
3,402

 
$
283

 
$
—

 
$
283

Derivative Liabilities
 
$
3,414

 
$
3,402

 
$
12

 
$
—

 
$
12

 
 
 
 
 
 
 
 
 
 
 

Derivative assets and liabilities are classified on the Consolidated Balance Sheet as accounts and notes receivable, long-term receivables, accounts payable, and deferred credits and other noncurrent obligations. Amounts not offset on the Consolidated Balance Sheet represent positions that do not meet all the conditions for “a right of offset.”  
Concentrations of Credit Risk The company’s financial instruments that are exposed to concentrations of credit risk consist primarily of its cash equivalents, time deposits, marketable securities, derivative financial instruments and trade receivables. The company’s short-term investments are placed with a wide array of financial institutions with high credit ratings. Company investment policies limit the company’s exposure both to credit risk and to concentrations of credit risk. Similar policies on diversification and creditworthiness are applied to the company’s counterparties in derivative instruments.
The trade receivable balances, reflecting the company’s diversified sources of revenue, are dispersed among the company’s broad customer base worldwide. As a result, the company believes concentrations of credit risk are limited. The company routinely assesses the financial strength of its customers. When the financial strength of a customer is not considered sufficient, alternative risk mitigation measures may be deployed, including requiring pre-payments, letters of credit or other acceptable collateral instruments to support sales to customers.