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FINANCIAL INSTRUMENTS | 3 Months Ended
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Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS RECURRING FAIR VALUE MEASUREMENTS Our assets and liabilities measured at fair value on a recurring basis consist of derivative instruments and investment securities.
| March 31, 2024 | December 31, 2023
| Level 1 | Level 2 | Level 3 | Net Balance | Level 1 | Level 2 | Level 3 | Net Balance
Assets |  |  |  |  |  |  |  |
Derivatives | $ | — |  | $ | 21 |  | $ | — |  | $ | 21 |  | $ | — |  | $ | 34 |  | $ | — |  | $ | 34 |
Investment securities | 1,042 |  | — |  | 2 |  | 1,044 |  | 1,040 |  | — |  | 2 |  | 1,042 |
Total assets | 1,042 |  | 21 |  | 2 |  | 1,065 |  | 1,040 |  | 34 |  | 2 |  | 1,076 |
Liabilities |  |  |  |  |  |  |  |
Derivatives | — |  | (73) |  | — |  | (73) |  | — |  | (76) |  | — |  | (76) |
Total liabilities | $ | — |  | $ | (73) |  | $ | — |  | $ | (73) |  | $ | — |  | $ | (76) |  | $ | — |  | $ | (76) |
| March 31, 2024 | December 31, 2023
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value
Investment securities (1) |  |  |  |  |  |  |  |
Non-U.S. debt securities (2) | $ | 30 |  | $ | — |  | $ | — |  | $ | 30 |  | $ | 66 |  | $ | 1 |  | $ | — |  | $ | 67 |
Equity securities | 529 |  | 485 |  | — |  | 1,014 |  | 527 |  | 451 |  | (3) |  | 975 |
Total | $ | 559 |  | $ | 485 |  | $ | — |  | $ | 1,044 |  | $ | 593 |  | $ | 452 |  | $ | (3) |  | $ | 1,042 |
(1)Gains recorded to earnings related to these securities were $27 million and $392 million for the three months ended March 31, 2024 and 2023, respectively. (2)As of March 31, 2024, our non-U.S. debt securities are classified as available for sale securities and mature within two years. As of March 31, 2024 and December 31, 2023, the balance of our equity securities with readily determinable fair values is $1,014 million and $975 million, respectively, and is comprised mainly of our investment in ADNOC Drilling, and is recorded primarily in "All other current assets" in the condensed consolidated statements of financial position. We measured our investments at fair value based on quoted prices in active markets. Gains recorded to earnings for our equity securities with readily determinable fair values were $52 million and $392 million for the three months ended March 31, 2024 and 2023, respectively. Gains (losses) related to our equity securities with readily determinable fair values are reported in "Other non-operating income (loss), net" in the condensed consolidated statements of income (loss). FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS Our financial instruments include cash and cash equivalents, current receivables, certain investments, accounts payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated fair value of these financial instruments as of March 31, 2024 and December 31, 2023 approximates their carrying value as reflected in our condensed consolidated financial statements. For further information on the fair value of our debt, see "Note 8. Debt." DERIVATIVES AND HEDGING We use derivatives to manage our risks and do not use derivatives for speculation. The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
| March 31, 2024 | December 31, 2023
| Assets | Liabilities | Assets | Liabilities
Derivatives accounted for as hedges |  |  |  |
Currency exchange contracts | $ | 10 |  | $ | (1) |  | $ | 10 |  | $ | (3) |
Interest rate swap contracts | — |  | (57) |  | — |  | (52) |
Derivatives not accounted for as hedges |  |  |  |
Currency exchange contracts and other | 11 |  | (15) |  | 24 |  | (21) |
Total derivatives | $ | 21 |  | $ | (73) |  | $ | 34 |  | $ | (76) |
Derivatives are classified in the condensed consolidated statements of financial position depending on their respective maturity date. As of March 31, 2024 and December 31, 2023, $19 million and $31 million of derivative assets are recorded in "All other current assets" and $2 million and $3 million are recorded in "All other assets" in the condensed consolidated statements of financial position, respectively. As of March 31, 2024 and December 31, 2023, $16 million and $23 million of derivative liabilities are recorded in "All other current liabilities" and $57 million and $53 million are recorded in "All other liabilities" in the condensed consolidated statements of financial position, respectively. In January 2024, we issued a credit default swap ("CDS") for a notional amount of $261 million to a third-party financial institution. The CDS relates to a secured borrowing provided by the financial institution to a customer in Mexico that was utilized to pay certain of our outstanding receivables. The notional amount of the CDS will reduce on a monthly basis over its 26-month term. As of March 31, 2024, the fair value of this derivative liability was not material. FORMS OF HEDGING Cash Flow Hedges We use cash flow hedging primarily to mitigate the effects of foreign exchange rate changes on purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of currency exchange contracts. In addition, we are exposed to interest rate risk fluctuations in connection with long-term debt that we issue from time to time to fund our operations. Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to as "Accumulated Other Comprehensive Income" or "AOCI") and are recorded in earnings in the period in which the hedged transaction occurs. See "Note 10. Equity" for further information on activity in AOCI for cash flow hedges. As of March 31, 2024 and December 31, 2023, the maximum term of cash flow hedges that hedge forecasted transactions was approximately two years. Fair Value Hedges All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with certain debt. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. As of March 31, 2024 and December 31, 2023, we had interest rate swaps with a notional amount of $500 million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk. As of July 1, 2023, the interest rate changed to be based on a Secured Overnight Financing Rate index. We concluded that the interest rate swap met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense. NOTIONAL AMOUNT OF DERIVATIVES The notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. We disclose the derivative notional amounts on a gross basis to indicate the total counterparty risk but it does not generally represent amounts exchanged by us and the counterparties. A substantial majority of the outstanding notional amount of $5.0 billion and $4.2 billion at March 31, 2024 and December 31, 2023, respectively, is related to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates, and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in foreign currencies. COUNTERPARTY CREDIT RISK Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis.

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