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Financial and Derivative Instruments | 9 Months Ended
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Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial and Derivative Instruments | Financial and Derivative Instruments The company’s commodity derivative instruments principally include crude oil, natural gas, liquefied natural gas and refined product futures, swaps, options and forward contracts. The company applies cash flow hedge accounting to certain commodity transactions, where appropriate, to manage the market price risk associated with forecasted sales of crude oil. The company’s derivatives are not material to the company’s consolidated financial position, results of operations or liquidity. The company believes it has no material market or credit risks to its operations, financial position or liquidity as a result of its commodities and other derivatives activities. The company uses commodity derivative instruments traded on the New York Mercantile Exchange and on electronic platforms of the Inter-Continental Exchange and Chicago Mercantile Exchange. In addition, the company enters into swap contracts and option contracts principally with major financial institutions and other oil and gas companies in the “over-the-counter” markets, which are governed by International Swaps and Derivatives Association agreements and other master netting arrangements. Derivative instruments measured at fair value at September 30, 2021, and December 31, 2020, and their classification on the Consolidated Balance Sheet and Consolidated Statement of Income are as follows:
Consolidated Balance Sheet: Fair Value of Derivatives (Millions of dollars)
Type of Contract |  | Balance Sheet Classification |  | At September 30, 2021 |  | At December 31, 2020
Commodity |  | Accounts and notes receivable, net |  | $ | 404 |  |  | $ | 73 |
Commodity |  | Long-term receivables, net |  | 90 |  |  | 1 |
Total Assets at Fair Value |  | $ | 494 |  |  | $ | 74 |
Commodity |  | Accounts payable |  | $ | 277 |  |  | $ | 172 |
Commodity |  | Deferred credits and other noncurrent obligations |  | 8 |  |  | 1 |
Total Liabilities at Fair Value |  | $ | 285 |  |  | $ | 173 |
Consolidated Statement of Income: The Effect of Derivatives (Millions of dollars)
Type of |  |  |  | Gain / (Loss) Three Months Ended September 30 |  | Gain / (Loss) Nine Months Ended September 30
Contract |  | Statement of Income Classification |  | 2021 |  | 2020 |  | 2021 |  | 2020
Commodity |  | Sales and other operating revenues |  | $ | 203 |  |  | $ | 38 |  |  | $ | (339) |  |  | $ | 283 |
Commodity |  | Purchased crude oil and products |  | (21) |  |  | (7) |  |  | (45) |  |  | (31) |
Commodity |  | Other income |  | (8) |  |  | 6 |  |  | (43) |  |  | 3 |
|  | $ | 174 |  |  | $ | 37 |  |  | $ | (427) |  |  | $ | 255 |
In the nine months ending September 30, 2021, cash flow hedging contracts decreased Sales and other operating revenues by $2 million compared with no impact in the same period of the prior year. At September 30, 2021, pre-tax deferred losses in Accumulated Other Comprehensive Losses related to outstanding crude oil price hedging contracts were $4 million, of which all is expected to be reclassified into earnings during the next 12 months as the hedged crude oil sales are recognized in earnings. The table below represents gross and net derivative assets and liabilities subject to netting agreements on the Consolidated Balance Sheet at September 30, 2021, and December 31, 2020.
Consolidated Balance Sheet: The Effect of Netting Derivative Assets and Liabilities (Millions of dollars)
|  | Gross Amount Recognized |  | Gross Amounts Offset |  | Net Amounts Presented |  | Gross Amounts Not Offset |  | Net Amount
At September 30, 2021 |  |  |  |  |
Derivative Assets - not designated |  | $ | 3,537 |  |  | $ | 3,043 |  |  | $ | 494 |  |  | $ | — |  |  | $ | 494 |
Derivative Liabilities - not designated |  | $ | 3,324 |  |  | $ | 3,043 |  |  | $ | 281 |  |  | $ | — |  |  | $ | 281 |
Derivative Liabilities - designated |  | $ | 4 |  |  | $ | — |  |  | $ | 4 |  |  | $ | — |  |  | $ | 4 |
At December 31, 2020 |  |  |  |  |  |  |  |  |  |
Derivative Assets - not designated |  | $ | 818 |  |  | $ | 744 |  |  | $ | 74 |  |  | $ | — |  |  | $ | 74 |
Derivative Liabilities - not designated |  | $ | 917 |  |  | $ | 744 |  |  | $ | 173 |  |  | $ | — |  |  | $ | 173 |
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.”

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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