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Hedging Activities and Fair Value Measurements | 12 Months Ended
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Dec. 31, 2025
Derivative Instruments and Hedges, Assets [Abstract] |
Hedging Activities and Fair Value Measurements | Note 14. Hedging Activities and Fair Value Measurements In the normal course of our business operations, we are exposed to certain risks, including changes in interest rates and commodity prices. In order to manage risks associated with assets, liabilities and certain anticipated future transactions, we use derivative instruments such as futures, forward contracts, swaps, options and other instruments with similar characteristics. Substantially all of our derivatives are used for non-trading activities. Interest Rate Hedging Activities We may utilize interest rate swaps, forward-starting swaps, options to enter into forward-starting swaps (“swaptions”), treasury locks and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements. This strategy may be used in controlling our overall cost of capital associated with such borrowings. Treasury Locks A treasury lock is an agreement that fixes the price (or yield) of a specified U.S. treasury security for an established period of time. We use treasury lock agreements to hedge our exposure to interest rate changes and to reduce the volatility of financing costs on an expected future debt issuance. Each of our treasury lock transactions was designated as a cash flow hedge of the interest payments associated with an anticipated debt issuance. During 2025, we entered into four treasury lock transactions to fix the seven-year treasury rate at a weighted-average rate of approximately 3.98% on an aggregate notional amount of $750 million. The purpose of these transactions was to hedge the underlying interest rate risk associated with debt issuances that occurred in June 2025 (see Note 7). Upon settlement of these treasury lock transactions in May 2025, we received total cash proceeds of $14 million. As cash flow hedges, gains on these derivative instruments are reflected as a component of accumulated other comprehensive income and will be amortized to earnings as a component of interest expense over seven years. During 2024, we terminated and settled treasury lock transactions with a combined notional amount of $3.75 billion and made total cash payments of $33 million. During 2023, we terminated and settled treasury lock transactions with a combined notional amount of $1.5 billion and received total cash proceeds of $21 million. As cash flow hedges, gains or losses on these derivative instruments are reflected as a component of accumulated other comprehensive income and will be amortized to earnings as a component of interest expense over the full term of each issuance. Forward-Starting Swaps Forward-starting swaps hedge the risk of an increase in underlying benchmark interest rates during the period of time between the inception date of the swap agreement and the future date of a debt issuance. Under the terms of the forward-starting swaps, we pay to the counterparties (at the expected settlement dates of the instruments) amounts based on a fixed interest rate applied to a notional amount and receive from the counterparties an amount equal to a variable interest rate on the same notional amount. Commodity Hedging Activities The prices of natural gas, NGLs, crude oil, petrochemicals and refined products and power are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control. In order to manage such price risks, we enter into commodity derivative instruments such as physical forward contracts, futures contracts, fixed-for-float swaps and basis swaps. At December 31, 2025, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging natural gas processing margins, (iii) hedging the fair value of commodity products held in inventory and (iv) hedging anticipated future purchases of power for certain operations in Southeast Texas. •The objective of our anticipated future commodity purchases and sales hedging program is to hedge the margins of certain transportation, storage, blending and operational activities by locking in purchase and sale prices through the use of derivative instruments and related contracts. •The objective of our natural gas processing hedging program is to hedge an amount of earnings associated with these activities. We achieve this objective by executing fixed-price sales for a portion of our expected equity production using derivative instruments and related contracts. For certain natural gas processing contracts, the hedging of expected equity NGL production also involves the purchase of natural gas for plant thermal reduction, which is hedged using derivative instruments and related contracts. •The objective of our inventory hedging program is to hedge the fair value of commodity products currently held in inventory by locking in the sales price of the inventory through the use of derivative instruments and related contracts. •The objective of our commercial energy hedging program is to hedge anticipated future purchases of power for certain operations in Southeast Texas by locking in purchase prices through the use of derivative instruments and related contracts. The following table summarizes our portfolio of commodity derivative instruments outstanding at December 31, 2025 (volume measures as noted):
| Volume (1) | Accounting Treatment
Derivative Purpose | Current (2) | Long-Term (2)
Derivatives designated as hedging instruments: |  |  |
Natural gas processing: |  |  |
Forecasted sales of natural gas (Bcf) | 45.3 | 18.0 | Cash flow hedge
Forecasted sales of NGLs (MMBbls) | 0.9 | n/a | Cash flow hedge
Octane enhancement: |  |  |
Forecasted sales of octane enhancement products (MMBbls) | 2.3 | 0.2 | Cash flow hedge
Natural gas marketing: |  |  |
Natural gas storage inventory management activities (Bcf) | 1.8 | n/a | Fair value hedge
NGL marketing: |  |  |
Forecasted purchases of NGLs and related hydrocarbon products (MMBbls) | 208.3 | 16.9 | Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products (MMBbls) | 212.9 | 27.0 | Cash flow hedge
Refined products marketing: |  |  |
Forecasted purchases of refined products (MMBbls) | 3.0 | n/a | Cash flow hedge
Forecasted sales of refined products (MMBbls) | 6.1 | 0.1 | Cash flow hedge
Crude oil marketing: |  |  |
Forecasted purchases of crude oil (MMBbls) | 19.5 | 7.3 | Cash flow hedge
Forecasted sales of crude oil (MMBbls) | 28.1 | 14.1 | Cash flow hedge
Petrochemical marketing: |  |  |
Forecasted sales of petrochemical products (MMBbls) | 0.3 | n/a | Cash flow hedge
Commercial energy: |  |  |
Forecasted purchases of power related to asset operations (terawatt hours (“TWh”)) | 1.0 | 0.3 | Cash flow hedge
Derivatives not designated as hedging instruments: |  |  |
Natural gas risk management activities (Bcf) (3) | 39.4 | n/a | Mark-to-market
NGL risk management activities (MMBbls) (3) | 58.3 | 6.4 | Mark-to-market
Refined products risk management activities (MMBbls) (3) | 7.8 | n/a | Mark-to-market
Crude oil risk management activities (MMBbls) (3) | 4.6 | n/a | Mark-to-market
(1)Volume for derivatives designated as hedging instruments reflects the total amount of volumes hedged whereas volume for derivatives not designated as hedging instruments reflects the absolute value of derivative notional volumes. (2)The maximum term for derivatives designated as cash flow hedges, derivatives designated as fair value hedges and derivatives not designated as hedging instruments is March 2029, February 2026 and December 2027, respectively. (3)Reflects the use of derivative instruments to manage risks associated with our transportation, processing and storage assets. The carrying amount of our inventories subject to fair value hedges was $6 million and $11 million at December 31, 2025 and 2024, respectively. Certain basis swaps and other derivative instruments not designated as hedging instruments are used to manage market risks associated with anticipated purchases and sales of commodity products. There is some uncertainty involved in the timing of these transactions often due to the development of more favorable profit opportunities or when spreads are insufficient to cover variable costs thus reducing the likelihood that the transactions will occur during the periods originally forecasted. In accordance with derivatives accounting guidance, these instruments do not qualify for hedge accounting even though they are effective at managing the risk exposures of the underlying assets. Due to volatility in commodity prices, any non-cash, mark-to-market earnings variability cannot be predicted. Tabular Presentation of Fair Value Amounts, and Gains and Losses on Derivative Instruments and Related Hedged Items The following table provides a balance sheet overview of our derivative assets and liabilities at the dates indicated:
| Asset Derivatives | Liability Derivatives
| December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024
| Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |
Commodity derivatives | Current assets | $ | 403 |  | Current assets | $ | 210 |  | Current liabilities | $ | 312 |  | Current liabilities | $ | 178 |
Commodity derivatives | Other assets | 26 |  | Other assets | 22 |  | Other liabilities | 13 |  | Other liabilities | 4 |
Total commodity derivatives |  | 429 |  |  | 232 |  |  | 325 |  |  | 182 |
Total derivatives designated as hedging instruments |  | $ | 429 |  |  | $ | 232 |  |  | $ | 325 |  |  | $ | 182 |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |
Commodity derivatives | Current assets | $ | 31 |  | Current assets | $ | 324 |  | Current liabilities | $ | 35 |  | Current liabilities | $ | 293 |
Commodity derivatives | Other assets | – |  | Other assets | 19 |  | Other liabilities | 3 |  | Other liabilities | 20 |
Total commodity derivatives |  | 31 |  |  | 343 |  |  | 38 |  |  | 313 |
Total derivatives not designated as hedging instruments |  | $ | 31 |  |  | $ | 343 |  |  | $ | 38 |  |  | $ | 313 |
Certain of our commodity derivative instruments are subject to master netting arrangements or similar agreements. The following tables present our derivative instruments subject to such arrangements at the dates indicated:
| Offsetting of Financial Assets and Derivative Assets
| Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Balance Sheet |  | Amounts of Assets Presented in the Balance Sheet |  | Gross Amounts Not Offset in the Balance Sheet |  | Amounts That Would Have Been Presented On Net Basis
|  |  |  | Financial Instruments |  | Cash Collateral Received |  | Cash Collateral Paid |
| (i) |  | (ii) |  | (iii) = (i) – (ii) |  | (iv) |  | (v) = (iii) + (iv)
As of December 31, 2025: |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivatives | $ | 460 |  |  | $ | – |  |  | $ | 460 |  |  | $ | (362) |  |  | $ | (98) |  |  | $ | – |  |  | $ | – |
As of December 31, 2024: |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivatives | $ | 575 |  |  | $ | – |  |  | $ | 575 |  |  | $ | (495) |  |  | $ | (79) |  |  | $ | – |  |  | $ | 1 |
| Offsetting of Financial Liabilities and Derivative Liabilities
| Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Balance Sheet |  | Amounts of Liabilities Presented in the Balance Sheet |  | Gross Amounts Not Offset in the Balance Sheet |  | Amounts That Would Have Been Presented On Net Basis
|  |  |  | Financial Instruments |  | Cash Collateral Received |  | Cash Collateral Paid |
| (i) |  | (ii) |  | (iii) = (i) – (ii) |  | (iv) |  | (v) = (iii) + (iv)
As of December 31, 2025: |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivatives | $ | 363 |  |  | $ | – |  |  | $ | 363 |  |  | $ | (362) |  |  | $ | – |  |  | $ | – |  |  | $ | 1 |
As of December 31, 2024: |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivatives | $ | 495 |  |  | $ | – |  |  | $ | 495 |  |  | $ | (495) |  |  | $ | – |  |  | $ | – |  |  | $ | – |
Derivative assets and liabilities recorded on our Consolidated Balance Sheets are presented on a gross basis and determined at the individual transaction level. This presentation method is applied regardless of whether the respective exchange clearing agreements, counterparty contracts or master netting agreements contain netting language often referred to as “rights of offset.” Although derivative amounts are presented on a gross basis, having rights of offset enable the settlement of a net as opposed to gross receivable or payable amount under a counterparty default or liquidation scenario. Cash is paid and received as collateral under certain agreements, particularly for those associated with exchange transactions. For any cash collateral payments or receipts, corresponding assets or liabilities are recorded to reflect the variation margin deposits or receipts with exchange clearing brokers and customers. These balances are also presented on a gross basis on our Consolidated Balance Sheets. The tabular presentation above provides a means for comparing the gross amount of derivative assets and liabilities, excluding associated accounts payable and receivable, to the net amount that would likely be receivable or payable under a default scenario based on the existence of rights of offset in the respective derivative agreements. Any cash collateral paid or received is reflected in these tables, but only to the extent that it represents variation margins. Any amounts associated with derivative prepayments or initial margins that are not influenced by the derivative asset or liability amounts or those that are determined solely on their volumetric notional amounts are excluded from these tables. The following tables present the effect of our derivative instruments designated as fair value hedges on our Statements of Consolidated Operations for the years indicated:
Derivatives in Fair Value Hedging Relationships | Location |  |  |  |  | Gain (Loss) Recognized in Income on Derivative
|  |  |  | For the Year Ended December 31,
|  |  |  |  |  | 2025 |  | 2024 |  | 2023
Commodity derivatives | Revenue |  |  |  |  | $ | 5 |  |  | $ | 2 |  |  | $ | 7 |
Total |  |  |  |  |  | $ | 5 |  |  | $ | 2 |  |  | $ | 7 |
Derivatives in Fair Value Hedging Relationships | Location |  |  |  |  | Gain (Loss) Recognized in Income on Hedged Item
|  |  |  | For the Year Ended December 31,
|  |  |  |  |  | 2025 |  | 2024 |  | 2023
Commodity derivatives | Revenue |  |  |  |  | $ | (3) |  |  | $ | 9 |  |  | $ | (7) |
Total |  |  |  |  |  | $ | (3) |  |  | $ | 9 |  |  | $ | (7) |
The gain (loss) corresponding to the hedge ineffectiveness on the fair value hedges was negligible for all periods presented. The remaining gain (loss) for each period presented is primarily attributable to prompt-to-forward month price differentials that were excluded from the assessment of hedge effectiveness. The following tables present the effect of our derivative instruments designated as cash flow hedges on our Statements of Consolidated Operations and Statements of Consolidated Comprehensive Income for the years indicated:
Derivatives in Cash Flow Hedging Relationships |  |  |  |  | Change in Value Recognized in Other Comprehensive Income (Loss) on Derivative
|  |  | For the Year Ended December 31,
|  |  |  |  | 2025 |  | 2024 |  | 2023
Interest rate derivatives |  |  |  |  | $ | 14 |  |  | $ | (2) |  |  | $ | (36) |
Commodity derivatives – Revenue (1) |  |  |  |  | 321 |  |  | 182 |  |  | 81 |
Commodity derivatives – Operating costs and expenses (1) |  |  |  |  | (36) |  |  | (67) |  |  | 12 |
Total |  |  |  |  | $ | 299 |  |  | $ | 113 |  |  | $ | 57 |
(1)The fair value of these derivative instruments will be reclassified to their respective locations on the Statement of Consolidated Operations when the forecasted transactions affect earnings.
Derivatives in Cash Flow Hedging Relationships | Location |  |  |  |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) to Income
|  |  |  | For the Year Ended December 31,
|  |  |  |  |  | 2025 |  | 2024 |  | 2023
Interest rate derivatives | Interest expense |  |  |  |  | $ | 7 |  |  | $ | 6 |  |  | $ | 5 |
Commodity derivatives | Revenue |  |  |  |  | 235 |  |  | 249 |  |  | 106 |
Commodity derivatives | Operating costs and expenses |  |  |  |  | (43) |  |  | (71) |  |  | 4 |
Total |  |  |  |  |  | $ | 199 |  |  | $ | 184 |  |  | $ | 115 |
Over the next twelve months, we expect to reclassify $7 million of gains attributable to interest rate derivative instruments from accumulated other comprehensive income to earnings as a decrease in interest expense. Likewise, we expect to reclassify $163 million of net gains attributable to commodity derivative instruments from accumulated other comprehensive income to earnings, with $169 million as an increase in revenue and $6 million as an increase in operating costs and expenses. The following table presents the effect of our derivative instruments not designated as hedging instruments on our Statements of Consolidated Operations for the years indicated:
Derivatives Not Designated as Hedging Instruments | Location |  |  |  |  | Gain (Loss) Recognized in Income on Derivative
|  |  |  | For the Year Ended December 31,
|  |  |  |  |  | 2025 |  | 2024 |  | 2023
Commodity derivatives | Revenue |  |  |  |  | $ | 45 |  |  | $ | 26 |  |  | $ | 213 |
Commodity derivatives | Operating costs and expenses |  |  |  |  | (5) |  |  | (4) |  |  | – |
Total |  |  |  |  |  | $ | 40 |  |  | $ | 22 |  |  | $ | 213 |
The $40 million net gain recognized for the year ended December 31, 2025 (as noted in the preceding table) from derivatives not designated as hedging instruments consists of $52 million of net realized gains and $12 million of net unrealized mark-to-market losses attributable to commodity derivatives. In total and inclusive of both fair value hedges and derivatives not designated as hedging instruments, unrealized mark-to-market gains (losses) included in gross operating margin were as follows for the years indicated:
| For the Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Mark-to-market gains (losses) in gross operating margin: |  |  |  |  |
NGL Pipelines & Services | $ | (3) |  |  | $ | (8) |  |  | $ | (25) |
Crude Oil Pipelines & Services | (4) |  |  | 21 |  |  | (5) |
Natural Gas Pipelines & Services | (10) |  |  | 5 |  |  | (1) |
Petrochemical & Refined Products Services | 1 |  |  | 2 |  |  | (2) |
Total mark-to-market impact on gross operating margin | $ | (16) |  |  | $ | 20 |  |  | $ | (33) |
Fair Value Measurements The following tables set forth, by level within the Level 1, 2 and 3 fair value hierarchy (see Note 2), the carrying values of our financial assets and liabilities at the dates indicated. These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of such inputs requires judgment. The values for commodity derivatives are presented before and after the application of CME Rule 814, which deems that financial instruments cleared by the CME are settled daily in connection with variation margin payments. As a result of this exchange rule, CME-related derivatives are considered to have no fair value at the balance sheet date for financial reporting purposes; however, the derivatives remain outstanding and subject to future commodity price fluctuations until they are settled in accordance with their contractual terms. Derivative transactions cleared on exchanges other than the CME (e.g., the Intercontinental Exchange or ICE) continue to be reported on a gross basis.
| At December 31, 2025 Fair Value Measurements Using |  |
| Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Financial assets: |  |  |  |  |  |  |
Commodity derivatives: |  |  |  |  |  |  |
Value before application of CME Rule 814 | $ | 172 |  |  | $ | 777 |  |  | $ | – |  |  | $ | 949 |
Impact of CME Rule 814 | (170) |  |  | (319) |  |  | – |  |  | (489) |
Total commodity derivatives | 2 |  |  | 458 |  |  | – |  |  | 460 |
Total | $ | 2 |  |  | $ | 458 |  |  | $ | – |  |  | $ | 460 |
Financial liabilities: |  |  |  |  |  |  |
Commodity derivatives: |  |  |  |  |  |  |
Value before application of CME Rule 814 | $ | 32 |  |  | $ | 710 |  |  | $ | – |  |  | $ | 742 |
Impact of CME Rule 814 | (31) |  |  | (348) |  |  | – |  |  | (379) |
Total commodity derivatives | 1 |  |  | 362 |  |  | – |  |  | 363 |
Total | $ | 1 |  |  | $ | 362 |  |  | $ | – |  |  | $ | 363 |
In the aggregate, the fair value of our commodity hedging portfolios at December 31, 2025 was a net derivative asset of $207 million prior to the impact of CME Rule 814.
| At December 31, 2024 Fair Value Measurements Using |  |
| Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Financial assets: |  |  |  |  |  |  |
Commodity derivatives: |  |  |  |  |  |  |
Value before application of CME Rule 814 | $ | 355 |  |  | $ | 443 |  |  | $ | – |  |  | $ | 798 |
Impact of CME Rule 814 | (56) |  |  | (167) |  |  | – |  |  | (223) |
Total commodity derivatives | 299 |  |  | 276 |  |  | – |  |  | 575 |
Total | $ | 299 |  |  | $ | 276 |  |  | $ | – |  |  | $ | 575 |
Financial liabilities: |  |  |  |  |  |  |
Commodity derivatives: |  |  |  |  |  |  |
Value before application of CME Rule 814 | $ | 291 |  |  | $ | 404 |  |  | $ | 21 |  |  | $ | 716 |
Impact of CME Rule 814 | (43) |  |  | (157) |  |  | (21) |  |  | (221) |
Total commodity derivatives | 248 |  |  | 247 |  |  | – |  |  | 495 |
Total | $ | 248 |  |  | $ | 247 |  |  | $ | – |  |  | $ | 495 |
Financial assets and liabilities recorded on the balance sheet at December 31, 2025 and 2024 using significant unobservable inputs (Level 3) and changes in the fair value of our recurring Level 3 financial assets and liabilities on a combined basis during the related periods were not material to the Consolidated Financial Statements. Other Fair Value Information The carrying amounts of cash and cash equivalents (including restricted cash balances), accounts receivable, commercial paper notes and accounts payable approximate their fair values based on their short-term nature. The estimated total fair value of our fixed-rate debt obligations was $32.2 billion and $28.9 billion at December 31, 2025 and 2024, respectively. The aggregate carrying value of these debt obligations was $34.1 billion and $31.6 billion at December 31, 2025 and 2024, respectively. These values are primarily based on quoted market prices for such debt or debt of similar terms and maturities (Level 2) and our credit standing. Changes in market rates of interest affect the fair value of our fixed-rate debt. The carrying values of our variable-rate long-term debt obligations approximate their fair values since the associated interest rates are market-based. We do not have any long-term investments in debt or equity securities recorded at fair value.

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