Risk Management (Notes)

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

13. Risk Management

Certain of our business activities expose us to risks associated with unfavorable changes in the market price of natural gas, NGL and crude oil. We also have exposure to interest rate and foreign currency risk as a result of the issuance of our debt obligations. Pursuant to our management’s approved risk management policy, we use derivative contracts to hedge or reduce our exposure to some of these risks.

Energy Commodity Price Risk Management

As of December 31, 2024, we had the following outstanding commodity forward contracts to hedge our forecasted energy commodity purchases and sales:


	Net open position long/(short)
Derivatives designated as hedging contracts
Crude oil fixed price	(16.8)	MMBbl

Natural gas fixed price	(64.8)	Bcf
Natural gas basis	(36.7)	Bcf

Derivatives not designated as hedging contracts
Crude oil fixed price	(1.0)	MMBbl
Crude oil basis	(0.2)	MMBbl
Natural gas fixed price	(7.0)	Bcf
Natural gas basis	(66.2)	Bcf
NGL fixed price	(1.3)	MMBbl

As of December 31, 2024, the maximum length of time over which we have hedged, for accounting purposes, our exposure to the variability in future cash flows associated with energy commodity price risk is through December 2028.

Interest Rate Risk Management

We utilize interest rate derivatives to hedge our exposure to both changes in the fair value of our fixed rate debt instruments and variability in expected future cash flows attributable to variable interest rate payments. The following table summarizes our outstanding interest rate contracts as of December 31, 2024:

Notional amount

Accounting treatment

Maximum term

(In millions)

Derivatives designated as hedging instruments

Fixed-to-variable interest rate contracts(a)

4,750

Fair value hedge

March 2035

Derivatives not designated as hedging instruments

Variable-to-fixed interest rate contracts

1,500

Mark-to-Market

December 2025

(a)The principal amount of hedged senior notes consisted of $1,500 million included in “Current portion of debt” and $3,250 million included in “Long-term debt” on our accompanying consolidated balance sheet.

Foreign Currency Risk Management

We utilize foreign currency derivatives to hedge our exposure to variability in foreign exchange rates. The following table summarizes our outstanding foreign currency contracts as of December 31, 2024:

Notional amount

Accounting treatment

Maximum term

(In millions)

Derivatives designated as hedging instruments

EUR-to-USD cross currency swap contracts(a)

543

Cash flow hedge

March 2027

(a)These swaps eliminate the foreign currency risk associated with our Euro-denominated debt.

Impact of Derivative Contracts on Our Consolidated Financial Statements

The following table summarizes the fair values of our derivative contracts included in our accompanying consolidated balance sheets:


Fair Value of Derivative Contracts
	Location	Derivatives Asset				Derivatives Liability
		December 31,				December 31,
		2024		2023		2024		2023
		(In millions)
Derivatives designated as hedging instruments
Energy commodity derivative contracts
	Other current assets/(Other current liabilities)	$	10	$	77	$	(46)	$	(75)
	Deferred charges and other assets/(Other long-term liabilities and deferred credits)	9		12		(8)		(29)
	Subtotal	19		89		(54)		(104)
Interest rate contracts
	Other current assets/(Other current liabilities)	1		—		(51)		(120)
	Deferred charges and other assets/(Other long-term liabilities and deferred credits)	19		37		(203)		(158)
	Subtotal	20		37		(254)		(278)
Foreign currency contracts
	Other current assets/(Other current liabilities)	—		—		(3)		(2)
	Deferred charges and other assets/(Other long-term liabilities and deferred credits)	—		—		(26)		(2)
	Subtotal	—		—		(29)		(4)
	Total	39		126		(337)		(386)

Derivatives not designated as hedging instruments
Energy commodity derivative contracts
	Other current assets/(Other current liabilities)	14		49		(35)		(8)
	Deferred charges and other assets/(Other long-term liabilities and deferred credits)	1		3		(15)		(1)
	Subtotal	15		52		(50)		(9)
Interest rate contracts
	Other current assets/(Other current liabilities)	4		—		—		—
	Deferred charges and other assets/(Other long-term liabilities and deferred credits)	4		—		(2)		—
	Subtotal	8		—		(2)		—
	Total	23		52		(52)		(9)
Total derivatives		$	62	$	178	$	(389)	$	(395)

The following two tables summarize the fair value measurements of our derivative contracts based on the three levels established by the ASC. The tables also identify the impact of derivative contracts which we have elected to present on our accompanying consolidated balance sheets on a gross basis that are eligible for netting under master netting agreements.


	Balance sheet asset fair value measurements by level
	Level 1		Level 2		Level 3		Gross amount		Contracts available for netting		Cash collateral held(a)		Net amount
	(In millions)
As of December 31, 2024
Energy commodity derivative contracts(b)	$	6	$	29	$	—	$	35	$	(19)	$	—	$	16
Interest rate contracts	—		27		—		27		—		—		27

As of December 31, 2023
Energy commodity derivative contracts(b)	$	65	$	75	$	—	$	140	$	(16)	$	—	$	124
Interest rate contracts	—		38		—		38		—		—		38


	Balance sheet liability fair value measurements by level
	Level 1		Level 2		Level 3		Gross amount		Contracts available for netting		Cash collateral posted(a)		Net amount
	(In millions)
As of December 31, 2024
Energy commodity derivative contracts(b)	$	(17)	$	(89)	$	—	$	(106)	$	19	$	52	$	(35)
Interest rate contracts	—		(254)		—		(254)		—		—		(254)
Foreign currency contracts	—		(29)		—		(29)		—		—		(29)
As of December 31, 2023
Energy commodity derivative contracts(b)	(17)		(96)		—		(113)		16		(85)		(182)
Interest rate contracts	—		(278)		—		(278)		—		—		(278)
Foreign currency contracts	—		(4)		—		(4)		—		—		(4)

(a)Any cash collateral paid or received is reflected in this table, but only to the extent that it represents variation margins. Any amount 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 this table.

(b)Level 1 consists primarily of NYMEX natural gas futures. Level 2 consists primarily of OTC WTI swaps, NGL swaps and crude oil basis swaps.

The following tables summarize the pre-tax impact of our derivative contracts in our accompanying consolidated statements of income and comprehensive income:


Derivatives in fair value hedging relationships	Location	Gain/(loss) recognized in income on derivatives and related hedged item
		Year Ended December 31,
		2024		2023		2022
		(In millions)
Interest rate contracts	Interest, net	$	(3)	$	138	$	(738)

Hedged fixed rate debt(a)	Interest, net	$	5	$	(132)	$	743

(a)As of December 31, 2024, the cumulative amount of fair value hedging adjustments to our hedged fixed rate debt was a decrease of $241 million included in “Debt fair value adjustments” on our accompanying consolidated balance sheet.


Derivatives in cash flow hedging relationships	Gain/(loss) recognized in OCI on derivatives(a)						Location	Gain/(loss) reclassified from Accumulated OCI into income(b)
	Year Ended							Year Ended
	December 31,							December 31,
	2024		2023		2022			2024		2023		2022
	(In millions)							(In millions)
Energy commodity derivative contracts	$	(26)	$	182	$	(338)	Revenues—Commodity sales	$	7	$	103	$	(491)

							Costs of sales	(29)		(73)		144
Interest rate contracts	13		(10)		7		Interest, net	4		—		—
Foreign currency contracts	(24)		30		(73)		Other, net	(34)		17		(68)
Total	$	(37)	$	202	$	(404)	Total	$	(52)	$	47	$	(415)

(a)We expect to reclassify an approximately $37 million loss associated with cash flow hedge price risk management activities included in our accumulated other comprehensive loss balance as of December 31, 2024 into earnings during the next twelve months (when the associated forecasted transactions are also expected to impact earnings); however, actual amounts reclassified into earnings could vary materially as a result of changes in market prices.

(b)During the year ended December 31, 2022, we recognized gains of $121 million associated with a write-down of hedged inventory. All other amounts reclassified were the result of the hedged forecasted transactions actually affecting earnings (i.e., when the forecasted sales and purchases actually occurred).


Derivatives not designated as accounting hedges	Location	Gain/(loss) recognized in income on derivatives
		Year Ended December 31,
		2024		2023		2022
		(In millions)
Energy commodity derivative contracts	Revenues—Commodity sales	$	20	$	75	$	137

	Costs of sales	(89)		100		(190)
	Earnings from equity investments	—		2		(11)
Interest rate contracts	Interest, net	3		1		(10)
Total(a)		$	(66)	$	178	$	(74)

(a)The years ended December 31, 2024, 2023 and 2022 include approximate gains (losses) of $8 million, $58 million and $(11) million, respectively, associated with natural gas, crude and NGL derivative contract settlements.

Credit Risks

In conjunction with certain derivative contracts, we are required to provide collateral to our counterparties, which may include posting letters of credit or placing cash in margin accounts. As of December 31, 2024 and 2023, we had no outstanding letters of credit supporting our commodity price risk management program. As of December 31, 2024, we had cash margins of $104 million posted by us with our counterparties as collateral and reported within “Restricted deposits” on our accompanying consolidated balance sheet. As of December 31, 2023, we had cash margins of $63 million posted by our counterparties with us as collateral and reported within “Other current liabilities” on our accompanying consolidated balance sheets. The cash margin balance at December 31, 2024 represents the initial margin requirements of $52 million, and variation margin requirements of $52 million. We also use industry standard commercial agreements that allow for the netting of exposures associated with transactions executed under a single commercial agreement. Additionally, we generally utilize master netting agreements to offset credit exposure across multiple commercial agreements with a single counterparty.

We also have agreements with certain counterparties to our derivative contracts that contain provisions requiring the posting of additional collateral upon a decrease in our credit rating. As of December 31, 2024, based on our current mark-to- market positions and posted collateral, we estimate that if our credit rating were downgraded one notch, we would not be required to post additional collateral. If we were downgraded two notches, we estimate that we would be required to post $25 million of additional collateral.