XML 59 R26.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 16—Income Taxes
Components of income tax provision (benefit) were:
Millions of Dollars
202420232022
Income Taxes
Federal
Current$629 1,054 1,263 
Deferred247 825 1,629 
Foreign
Current3,249 2,931 5,813 
Deferred71 254 387 
State and local
Current182 202 386 
Deferred49 65 70 
Total tax provision (benefit)$4,427 5,331 9,548 
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax liabilities and assets at December 31 were:
Millions of Dollars
20242023
Deferred Tax Liabilities
PP&E and intangibles$15,609 11,992 
Inventory91 46 
Other155 216 
Total deferred tax liabilities15,855 12,254 
Deferred Tax Assets
Benefit plan accruals432 413 
Asset retirement obligations and accrued environmental costs2,799 2,608 
Investments in joint ventures2,269 2,133 
Other financial accruals and deferrals497 448 
Loss and credit carryforwards4,910 5,629 
Other187 121 
Total deferred tax assets11,094 11,352 
Less: valuation allowance(6,435)(7,656)
Total deferred tax assets net of valuation allowance4,659 3,696 
Net deferred tax liabilities$11,196 8,558 
At December 31, 2024, noncurrent assets and liabilities included deferred taxes of $230 million and $11,426 million, respectively. At December 31, 2023, noncurrent assets and liabilities included deferred taxes of $255 million and $8,813 million, respectively.
Our deferred tax liability increased during 2024 by $2.5 billion due to the acquisition of Marathon Oil.
At December 31, 2024, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax credit carryforwards of $3.3 billion and various jurisdictions net operating loss and credit carryforwards of $1.6 billion. In 2024, $1.2 billion of U.S. foreign tax credits expired. This reduction was partly offset by an increase of $700 million in our U.S. net operating loss, foreign tax credit carryforwards, and other credit carryforwards due to our acquisition of Marathon Oil. See Note 3.
At December 31, 2023, the loss and credit carryforward deferred tax assets were primarily related to U.S. foreign tax credit carryforwards of $4.7 billion and various jurisdictions net operating loss and credit carryforwards of $0.9 billion.
The following table shows a reconciliation of the beginning and ending deferred tax asset valuation allowance for 2024, 2023 and 2022:
Millions of Dollars
202420232022
Balance at January 1$7,656 8,049 8,342 
Charged to expense (benefit)(409)(2)5 
Other*(812)(391)(298)
Balance at December 31
$6,435 7,656 8,049 
*Represents changes due to deferred tax assets that have no impact to our effective tax rate, acquisitions/dispositions/revisions and the effect of translating foreign financial statements.

Valuation allowances have been established to reduce deferred tax assets to an amount that will, more likely than not, be realized. At December 31, 2024, we have maintained a valuation allowance with respect to substantially all U.S. foreign tax credit carryforwards, basis differences in our APLNG investment, and certain net operating loss carryforwards for various jurisdictions. During 2024, the valuation allowance movement charged to earnings primarily relates to the ability to utilize a portion of ConocoPhillips foreign tax credit carryforwards due to the acquisition of Marathon Oil. During 2022, the valuation allowance movement charged to earnings primarily related to the impact of 2022 changes to Norway’s Petroleum Tax System which is partly offset by the U.S. tax impact of the disposition of our CVE common shares. Other movements are primarily related to valuation allowances on expiring tax attributes. Based on our historical taxable income, expectations for the future and available tax-planning strategies, management expects deferred tax assets, net of valuation allowances, will primarily be realized as offsets to reversing deferred tax liabilities. See Note 3.

As a result of the acquisition of Marathon Oil, we utilized foreign tax credits previously offset by a valuation allowance. During the fourth quarter of 2024, a tax benefit of $394 million was recorded as a result of the acquisition and the subsequent utilization of the foreign tax credits. See Note 3.

During the second quarter of 2022, Norway enacted changes to the Petroleum Tax System. As a result of the enactment, a valuation allowance of $58 million was recorded during the second quarter to reflect changes to our ability to realize certain deferred tax assets under the new law.
At December 31, 2024, unremitted income considered to be permanently reinvested in certain foreign subsidiaries and foreign corporate joint ventures totaled approximately $5,226 million. Deferred income taxes have not been provided on this amount, as we do not plan to initiate any action that would require the payment of income taxes. The estimated amount of additional tax, primarily local withholding tax, that would be payable on this income if distributed is approximately $261 million.
The following table shows a reconciliation of the beginning and ending unrecognized tax benefits for 2024, 2023 and 2022:
Millions of Dollars
202420232022
Balance at January 1$387 710 1,345 
Additions based on tax positions related to the current year3 5 6 
Additions for tax positions of prior years127 1 6 
Reductions for tax positions of prior years— (9)(62)
Settlements(121)(96)(510)
Lapse of statute(19)(224)(75)
Balance at December 31
$377 387 710 
Included in the balance of unrecognized tax benefits for 2024, 2023 and 2022 were $368 million, $378 million and $701 million, respectively, which, if recognized, would impact our effective tax rate.
The balance of the unrecognized tax benefits decreased in 2024 due to the resolution of certain items with U.S. and Norwegian taxing authorities. The balance of our unrecognized tax benefits increased in 2024 primarily due to U.S. tax credits acquired through our acquisition of Marathon Oil. See Note 3.

The balance of the unrecognized tax benefits decreased in 2023 due to the lapsing of the statute of limitations on certain of our foreign subsidiaries of $224 million as well as the closing of our 2018 Canadian domestic audit that resulted in a reduction of $92 million.

The balance of the unrecognized tax benefits decreased in 2022 due to the closing of the 2017 audit of our federal income tax return. As a result, we recognized federal and state tax benefits totaling $515 million relating to the recovery of outside tax basis previously offset by a full reserve.
At December 31, 2024, 2023 and 2022, accrued liabilities for interest and penalties totaled $26 million, $45 million and $35 million, respectively, net of accrued income taxes. Interest and penalties resulted in an increase to earnings of $19 million in 2024, a reduction to earnings of $10 million in 2023 and an increase to earnings of $12 million in 2022.
We file tax returns in the U.S. federal jurisdiction and in many foreign and state jurisdictions. Audits in major jurisdictions are generally complete as follows: Canada (2016), Norway (2023) and U.S. (2019). Issues in dispute for audited years and audits for subsequent years are ongoing and in various stages of completion in the many jurisdictions in which we operate around the world. Consequently, the balance in unrecognized tax benefits can be expected to fluctuate from period to period. Within the next twelve months, we may have audit periods close that could significantly impact our total unrecognized tax benefits. It is reasonably possible such changes could be significant when compared with our total unrecognized tax benefits, but the amount of change is not estimable.
The amounts of U.S. and foreign income (loss) before income taxes, with a reconciliation of tax at the federal statutory rate to the provision for income taxes, were:
Millions of DollarsPercent of Pre-Tax Income (Loss)
202420232022202420232022
Income (loss) before income taxes
United States$6,731 9,472 16,739 49.2 %58.2 59.3 
Foreign6,941 6,816 11,489 50.8 41.8 40.7 
$13,672 16,288 28,228 100.0 %100.0 100.0 
Federal statutory income tax$2,871 3,421 5,928 21.0 %21.0 21.0 
Non-U.S. effective tax rates1,822 2,063 3,866 13.3 12.7 13.7 
Recovery of outside basis(5)(4)(30)— — (0.1)
Adjustment to tax reserves(57)(317)(551)(0.4)(1.9)(2.0)
Adjustment to valuation allowance(409)(2)5 (3.0)— — 
State income tax187 214 405 1.4 1.3 1.4 
Other18 (44)(75)0.1 (0.3)(0.2)
Total$4,427 5,331 9,548 32.4 %32.7 33.8 

Our effective tax rate for 2024 was driven by our jurisdictional tax rates for this profit mix with a favorable impact from the acquisition of Marathon Oil enabling the utilization of foreign tax credits previously offset by a valuation allowance. See Note 3.

Our effective tax rate for 2023 was driven by our jurisdictional tax rates for this profit mix with a favorable impact from routine tax credits. The adjustment to tax reserves primarily relates to the lapsing of the statute of limitations on certain of our foreign subsidiaries and the closing of the 2018 Canadian domestic audit.

Our effective tax rate for 2022 was driven by our jurisdictional tax rates for this profit mix with net favorable impacts from routine tax credits and valuation allowance adjustments. The adjustment to tax reserves primarily relates to the closing of the audit of our 2017 U.S. federal tax return and the recognition of the U.S. federal and state tax benefits described above.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which among other things, implemented a 15 percent minimum tax on book income of certain large corporations, a one percent excise tax on net stock repurchased and several tax incentives to promote lower carbon energy. These law changes did not have a material impact to our consolidated financial statements.