We use futures, forwards, swaps and options in various markets to meet our customer needs, capture market opportunities and manage foreign exchange currency risk. Certain of our equity method investments use swaps to manage interest rate risk.

Commodity derivative instruments are held at fair value on our consolidated balance sheet. Where these balances have the right of setoff, they are presented on a net basis. Related cash flows are recorded as operating activities on our consolidated statement of cash flows. On our consolidated income statement, gains and losses are recognized either on a gross basis if directly related to our physical business or a net basis if held for trading. Gains and losses related to contracts that meet and are designated with the NPNS exception are recognized upon settlement. We generally apply this exception to eligible crude contracts and certain gas contracts. We do not apply hedge accounting for our commodity derivatives.


	Millions of Dollars
	June 30 2023		December 31 2022
Assets
Prepaid expenses and other current assets	$	793	1,795
Other assets	182		242
Liabilities
Other accruals	749		1,800
Other liabilities and deferred credits	148		210


	Millions of Dollars
	Three Months Ended June 30			Six Months Ended June 30
	2023		2022	2023	2022

Sales and other operating revenues	$	(16)	(13)	12	(420)
Other income	(2)		1	(1)	2
Purchased commodities	16		(55)	(56)	346

At June 30, 2023, we had outstanding foreign currency forward contracts to buy $5.2 billion CAD at $0.751 against the U.S. dollar in anticipation of our planned acquisition of the additional interest in Surmont. See Note 3. The forward contracts are carried at a fair value of $19 million and are reported within the "Prepaid expenses and other current assets" line on our consolidated balance sheet. For the three- and six-month periods ended June 30, 2023, we recorded an unrealized gain of $19 million in the "Foreign currency transaction gain" line on our consolidated income statement.

During 2023, PALNG executed interest rate swaps that had the effect of converting 60 percent of the projected term loans outstanding to finance the cost of development and construction of Phase 1 from floating to fixed rate. These swaps were designated and qualify for hedge accounting under ASC Topic 815, "Derivatives and Hedging", as a cash flow hedge with changes in the fair value of the designated hedging instrument reported as a component of other comprehensive income and reclassified into earnings in the same periods that the hedged transactions will affect earnings. We recognize our proportionate share of PALNG’s adjustments for other comprehensive income as a change to our equity method investment with corresponding adjustments in equity. For the three- and six-month periods ended June 30, 2023, the impact of these adjustments on our financial statements was negligible.

We invest in financial instruments with maturities based on our cash forecasts for the various accounts and currency pools we manage. The types of financial instruments in which we currently invest include:

The following investments are carried on our consolidated balance sheet at cost, plus accrued interest, and the table reflects remaining maturities at June 30, 2023, and December 31, 2022:


	Millions of Dollars
	Carrying Amount
	Cash and Cash Equivalents			Short-Term Investments
	June 30 2023		December 31 2022	June 30 2023	December 31 2022
Cash	$	551	593
Demand Deposits	831		1,638
Time Deposits
1 to 90 days	4,244		4,116	471	1,288
91 to 180 days				85	883
Within one year				16	11
U.S. Government Obligations
1 to 90 days	49		14	—	—
	$	5,675	6,361	572	2,182

The following investments in debt securities classified as available for sale are carried at fair value on our consolidated balance sheet at June 30, 2023, and December 31, 2022:


	Millions of Dollars
	Carrying Amount
	Cash and Cash Equivalents			Short-Term Investments		Investments and Long-Term Receivables
	June 30 2023		December 31 2022	June 30 2023	December 31 2022	June 30 2023	December 31 2022
Major Security Type
Corporate Bonds	$	—	—	231	323	387	309
Commercial Paper	60		97	139	156
U.S. Government Obligations	—		—	120	115	161	63
U.S. Government Agency Obligations				17	8	7	5
Foreign Government Obligations				—	—	11	7
Asset-backed Securities				1	1	116	138
	$	60	97	508	603	682	522


	Millions of Dollars
	Amortized Cost Basis			Fair Value
	June 30 2023		December 31 2022	June 30 2023	December 31 2022
Major Security Type
Corporate Bonds	$	627	641	618	632
Commercial Paper	199		253	199	253
U.S. Government Obligations	284		181	281	178
U.S. Government Agency Obligations	24		13	24	13
Foreign Government Obligations	11		7	11	7
Asset-backed Securities	118		139	117	139
	$	1,263	1,234	1,250	1,222

As of June 30, 2023, and December 31, 2022, total unrealized losses for debt securities classified as available for sale with net losses were $14 million and $12 million, respectively. No allowance for credit losses has been recorded on investments in debt securities which are in an unrealized loss position.

For the three- and six-month periods ended June 30, 2023, proceeds from sales and redemptions of investments in debt securities classified as available for sale were $251 million and $551 million, respectively. For the three- and six-month periods ended June 30, 2022, proceeds from sales and redemptions of investments in debt securities classified as available for sale were $86 million and $201 million, respectively. Gross realized gains and losses included in earnings from those sales and redemptions were negligible. The cost of securities sold and redeemed is determined using the specific identification method.

Financial instruments potentially exposed to concentrations of credit risk consist primarily of cash equivalents, short-term investments, long-term investments in debt securities, OTC derivative contracts and trade receivables. Our cash equivalents and short-term investments are placed in high-quality commercial paper, government money market funds, U.S. government and government agency obligations, time deposits with major international banks and financial institutions, high-quality corporate bonds, foreign government obligations and asset-backed securities. Our long-term investments in debt securities are placed in high-quality corporate bonds, asset-backed securities, U.S. government and government agency obligations, and foreign government obligations.

The credit risk from our OTC derivative contracts, such as forwards, swaps and options, 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 primarily with an exchange clearinghouse and subject to mandatory margin requirements until settled; however, we are exposed to the credit risk of those exchange brokers for receivables arising from daily margin cash calls, as well as for cash deposited to meet initial margin requirements.

Our trade receivables result primarily from our oil and gas 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, and we continually monitor this exposure and the creditworthiness of the counterparties. We may require collateral to limit the exposure to loss including letters of credit, prepayments and surety bonds, as well as 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 or owed to others to be offset against amounts due to us.

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 rating. The variable threshold amounts typically decline for lower credit ratings, while both the variable and fixed threshold amounts typically revert to zero if we fall below investment grade. Cash is the primary collateral in all contracts; however, many also permit us to post letters of credit as collateral, such as transactions administered through the New York Mercantile Exchange.

The aggregate fair value of all derivative instruments with such credit risk-related contingent features that were in a liability position at June 30, 2023, and December 31, 2022, was $166 million and $333 million, respectively. For these instruments, no collateral was posted at June 30, 2023 and $42 million of collateral was posted at December 31, 2022. If our credit rating had been downgraded below investment grade at June 30, 2023, we would have been required to post $131 million of additional collateral, either with cash or letters of credit.