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
	2023		2022
Assets
Prepaid expenses and other current assets	$	611	1,795
Other assets	113		242
Liabilities
Other accruals	567		1,800
Other liabilities and deferred credits	80		210

On January 15, 2021, we assumed financial derivative instruments consisting of oil and natural gas swaps in connection with the acquisition of Concho. At the acquisition date, these financial derivative instruments acquired were recognized at fair value as a net liability of $456 million with settlement dates under the contracts through December 31, 2022. During 2021, we recognized a loss on settlement of these derivatives contracts of $305 million. This loss is recorded within the “Sales and other operating revenues” line on our consolidated income statement. In connection with the settlement, we issued a cash payment of $761 million during 2021 which is included within “Cash Flows From Operating Activities” on our consolidated statement of cash flows.

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 instruments 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 year ended December 31, 2023, we recognized an unrealized gain of $78 million in other comprehensive income related to these swaps.

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:


	Millions of Dollars
	Carrying Amount
	Cash and Cash Equivalents			Short-Term Investments
	2023		2022	2023	2022

Cash	$	474	593
Demand Deposits	1,424		1,638
Time Deposits
1 to 90 days	3,713		4,116	511	1,288
91 to 180 days				22	883
Within one year				3	11
U.S. Government Obligations
1 to 90 days	24		14	—	—
	$	5,635	6,361	536	2,182


	Millions of Dollars
	Carrying Amount
	Cash and Cash Equivalents			Short-Term Investments		Investments and Long-Term Receivables
	2023		2022	2023	2022	2023	2022
Major Security Type
Corporate Bonds	$	—	—	201	323	606	309
Commercial Paper	—		97	131	156
U.S. Government Obligations	—		—	89	115	189	63
U.S. Government Agency Obligations				5	8	7	5
Foreign Government Obligations				7	—	4	7
Asset-backed Securities				2	1	183	138
	$	—	97	435	603	989	522

Cash and Cash Equivalents and Short-Term Investments have remaining maturities within one year. Investments and Long-Term Receivables have remaining maturities that vary from greater than one year through five years.


	Millions of Dollars
	Amortized Cost Basis			Fair Value
	2023		2022	2023	2022
Major Security Type
Corporate Bonds	$	806	641	807	632
Commercial Paper	131		253	131	253
U.S. Government Obligations	278		181	278	178
U.S. Government Agency Obligations	12		13	12	13
Foreign Government Obligations	11		7	11	7
Asset-backed Securities	184		139	185	139
	$	1,422	1,234	1,424	1,222

As of December 31, 2023, total unrealized gains for debt securities classified as available for sale with net unrealized gains were $5 million and as of December 31, 2022, total unrealized losses for debt securities classified as available for sale with net unrealized losses were $12 million. No allowance for credit losses has been recorded on investments in debt securities which are in an unrealized loss position.

For the years ended December 31, 2023 and 2022, proceeds from sales and redemptions of investments in debt securities classified as available for sale were $983 million and $644 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, foreign government obligations, and time deposits with major international banks and financial institutions.

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 petroleum 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 on December 31, 2023 and December 31, 2022, was $181 million and $333 million, respectively. For these instruments, no collateral was posted as of December 31, 2023 and $42 million collateral was posted as of December 31, 2022. If our credit rating had been downgraded below investment grade on December 31, 2023, we would have been required to post $152 million of additional collateral, either with cash or letters of credit.