PHILLIPS 66, 10-Q filed on 10/31/2013
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2013
Document and Entity Information [Abstract]
 
Entity Registrant Name
Phillips 66 
Entity Central Index Key
0001534701 
Trading Symbol
PSX 
Current Fiscal Year End Date
--12-31 
Entity Filer Category
Large Accelerated Filer 
Document Type
10-Q 
Document Period End Date
Sep. 30, 2013 
Document Fiscal Year Focus
2013 
Document Fiscal Period Focus
Q3 
Amendment Flag
false 
Entity Common Stock, Shares Outstanding
599,536,436 
Consolidated Statement of Income (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Sales and other operating revenues
 
 
 
 
Sales and other operating revenues
$ 44,201 1
$ 42,945 1
$ 128,704 1
$ 135,475 1
Equity in earnings of affiliates
647 
959 
2,304 
2,508 
Net gain (loss) on dispositions
8 
(1)
50 
189 
Other income (loss)
(7)
4 
65 
82 
Total Revenues and Other Income
44,849 
43,907 
131,123 
138,254 
Costs and Expenses
 
 
 
 
Purchased crude oil and products
38,746 
36,189 
111,287 
116,915 
Operating expenses
987 
884 
2,998 
2,960 
Selling, general and administrative expenses
354 
432 
1,060 
1,261 
Depreciation and amortization
236 
229 
712 
669 
Impairments
1 
248 
26 
566 
Taxes other than income taxes
3,624 1
3,410 1
10,450 1
10,305 1
Accretion on discounted liabilities
6 
7 
18 
18 
Interest and debt expense
68 
74 
207 
170 
Foreign currency transaction (gains) losses
1 
(15)
(16)
(22)
Total Costs and Expenses
44,023 
41,458 
126,742 
132,842 
Income before income taxes
826 
2,449 
4,381 
5,412 
Provision for income taxes
286 
848 
1,471 
1,991 
Net income
540 
1,601 
2,910 
3,421 
Less: net income attributable to noncontrolling interests
5 
2 
10 
5 
Net Income Attributable to Phillips 66
$ 535 
$ 1,599 
$ 2,900 
$ 3,416 
Net Income Attributable to Phillips 66 Per Share of Common Stock (dollars)
 
 
 
 
Basic
$ 0.88 2
$ 2.53 2
$ 4.69 2
$ 5.43 
Diluted
$ 0.87 2
$ 2.51 2
$ 4.65 2
$ 5.37 
Dividends Paid Per Share of Common Stock (dollars)
$ 0.3125 
$ 0.200 
$ 0.9375 
$ 0.20 
Average Common Shares Outstanding (in thousands)
 
 
 
 
Basic
608,934 2
630,672 2
617,654 2
628,940 2
Diluted
614,519 2
637,913 2
623,846 
636,585 
Consolidated Statement of Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Income Statement [Abstract]
 
 
 
 
Includes excise taxes on petroleum products sales
$ 3,568 
$ 3,312 
$ 10,254 
$ 10,022 
Consolidated Statement of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net Income
$ 540 
$ 1,601 
$ 2,910 
$ 3,421 
Defined benefit plans
 
 
 
 
Amortization to net income of prior service cost
 
   
 
1 
Actuarial gain/loss:
 
 
 
 
Actuarial gain arising during the period
 
   
 
90 
Amortization to net income of net actuarial loss
22 
22 
72 
37 
Plans sponsored by equity affiliates
6 
6 
(2)
14 
Income taxes on defined benefit plans
(11)
(10)
(25)
(52)
Defined benefit plans, net of tax
17 
18 
45 
90 
Foreign currency translation adjustments
186 
210 
(98)
151 
Income taxes on foreign currency translation adjustments
(4)
   
(1)
48 
Foreign currency translation adjustments, net of tax
182 
210 
(99)
199 
Hedging activities by equity affiliates
   
1 
1 
1 
Income taxes on hedging activities by equity affiliates
   
   
   
   
Hedging activities by equity affiliates, net of tax
   
1 
1 
1 
Other Comprehensive Income (Loss), Net of Tax
199 
229 
(53)
290 
Comprehensive Income
739 
1,830 
2,857 
3,711 
Less: comprehensive income attributable to noncontrolling interests
5 
2 
10 
5 
Comprehensive Income Attributable to Phillips 66
$ 734 
$ 1,828 
$ 2,847 
$ 3,706 
Consolidated Balance Sheet (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Assets
 
 
Cash and cash equivalents
$ 5,942 1
$ 3,474 1
Accounts and notes receivable (net of allowance of $40 million in 2013 and $50 million in 2012)
7,618 
8,593 
Accounts and notes receivable - related parties
2,126 
1,810 
Inventories
4,737 
3,430 
Prepaid expenses and other current assets
662 
655 
Total Current Assets
21,085 
17,962 
Investments and long-term receivables
10,728 
10,471 
Net properties, plants and equipment
15,077 
15,407 
Goodwill
3,228 
3,344 
Intangibles
713 
724 
Other assets
152 
165 
Total Assets
50,983 
48,073 
Liabilities
 
 
Accounts payable
11,236 
9,731 
Accounts payable - related parties
1,508 
979 
Short-term debt
24 
13 
Accrued income and other taxes
889 
901 
Employee benefit obligations
332 
441 
Other accruals
691 
417 
Total Current Liabilities
14,680 
12,482 
Long-term debt
6,132 
6,961 
Asset retirement obligations and accrued environmental costs
687 
740 
Deferred income taxes
5,633 
5,444 
Employee benefit obligations
1,286 
1,325 
Other liabilities and deferred credits
571 
315 
Total Liabilities
28,989 
27,267 
Equity
 
 
Common stock (2,500,000,000 shares authorized at $.01 par value) Issued (2013—633,785,385 shares; 2012—631,149,613 shares)
6 
6 
Capital in excess of par
18,839 
18,726 
Treasury stock (at cost: 2013—34,248,949 shares; 2012—7,603,896 shares)
(1,958)
(356)
Retained earnings
5,030 
2,713 
Accumulated other comprehensive loss
(367)
(314)
Total Stockholders' Equity
21,550 
20,775 
Noncontrolling interests
444 
31 
Total Equity
21,994 
20,806 
Total Liabilities and Equity
$ 50,983 
$ 48,073 
Consolidated Balance Sheet (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Accounts and notes receivable - allowance
$ 40 
$ 50 
Common stock, shares authorized
2,500,000,000 
2,500,000,000 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares Issued
633,785,385 
631,149,613 
Treasury stock, shares
34,248,949 
7,603,896 
Cash and cash equivalents
5,942 1
3,474 1
Phillips 66 Partners LP [Member]
 
 
Cash and cash equivalents
$ 422 
 
Consolidated Statement of Cash Flows (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Cash Flows From Operating Activities
 
 
Net income
$ 2,910 
$ 3,421 
Adjustments to reconcile net income to net cash provided by operating activities
 
 
Depreciation and amortization
712 
669 
Impairments
26 
566 
Accretion on discounted liabilities
18 
18 
Deferred taxes
281 
111 
Undistributed equity earnings
(76)
(928)
Net gain on dispositions
(50)
(189)
Other
34 
81 
Working capital adjustments
 
 
Decrease (increase) in accounts and notes receivable
535 
(677)
Decrease (increase) in inventories
(1,352)
(2,253)
Decrease (increase) in prepaid expenses and other current assets
(90)
(266)
Increase (decrease) in accounts payable
2,018 
1,912 
Increase (decrease) in taxes and other accruals
164 
526 
Net Cash Provided by Operating Activities
5,130 
2,991 
Cash Flows From Investing Activities
 
 
Capital expenditures and investments
(1,170)
(827)
Proceeds from asset dispositions
1,188 
259 
Advances/loans—related parties
(65)
(100)
Collection of advances/loans—related parties
100 
   
Net Cash Provided by (Used in) Investing Activities
53 
(668)
Cash Flows From Financing Activities
 
 
Distributions to ConocoPhillips
   
(5,255)
Issuance of debt
   
7,794 
Repayment of debt
(1,015)
(206)
Issuance of common stock
(4)
23 
Repurchase of common stock
(1,602)
(111)
Dividends paid on common stock
(575)
(125)
Net proceeds from issuance of Phillips 66 Partners LP common units
404 
   
Other
(5)
(40)
Net Cash Provided by (Used in) Financing Activities
(2,797)
2,080 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
82 
27 
Net Change in Cash and Cash Equivalents
2,468 
4,430 
Cash and cash equivalents at beginning of period
3,474 1
   
Cash and Cash Equivalents at End of Period
$ 5,942 1
$ 4,430 
Consolidated Statement of Changes in Equity (USD $)
In Millions, except Share data, unless otherwise specified
Total
Par Value [Member]
Capital in Excess of Par [Member]
Treasury Stock [Member]
Retained Earnings [Member]
Net Parent Company Investment [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Noncontrolling Interests [Member]
Beginning Balance at Dec. 31, 2011
$ 23,293 
    
    
    
    
$ 23,142 
$ 122 
$ 29 
Net income
3,421 
 
 
 
2,291 
1,125 
 
5 
Net transfers to ConocoPhillips
(6,248)
 
 
 
 
(5,707)
(541)
 
Other comprehensive income (Loss)
290 
 
 
 
 
 
290 
 
Reclassification of net parent company investment to capital in excess of par
 
 
18,560 
 
 
(18,560)
 
 
Issuance of common stock at the Separation
 
6 
(6)
 
 
 
 
 
Cash dividends paid on common stock
(125)
 
 
 
(125)
 
 
 
Repurchase of common stock
(111)
 
 
(111)
 
 
 
 
Benefit plan activity
 
 
89 
 
(2)
 
 
 
Distributed under benefit plans
87 
 
 
 
 
 
 
 
Distributions to noncontrolling interests and other
(1)
 
 
 
 
 
 
(1)
Ending Balance at Sep. 30, 2012
20,606 
6 
18,643 
(111)
2,164 
   
(129)
33 
Beginning Balance at Dec. 31, 2012
20,806 
6 
18,726 
(356)
2,713 
   
(314)
31 
Beginning Balance, Treasury shares at Dec. 31, 2012
7,603,896 
 
 
 
 
 
 
 
Beginning Balance, Common shares at Dec. 31, 2012
631,149,613 
 
 
 
 
 
 
 
Net income
2,910 
 
 
 
2,900 
   
 
10 
Other comprehensive income (Loss)
(53)
 
 
 
 
 
(53)
 
Cash dividends paid on common stock
(575)
 
 
 
(575)
 
 
 
Repurchase of common stock
(1,602)
 
 
(1,602)
 
 
 
 
Benefit plan activity
108 
 
116 
 
(8)
 
 
 
Issuance of Phillips 66 Partners LP common units
404 
 
 
 
 
 
 
404 
Distributions to noncontrolling interests and other
 
 
 
 
 
 
 
(1)
Distributions to noncontrolling interests and other
 
 
(3)
 
 
 
 
 
Distributions to noncontrolling interests and other
(4)
 
 
 
 
 
 
 
Shares
 
 
 
 
 
 
 
 
Repurchase of common stock, shares
26,645,000 
 
 
 
 
 
 
 
Shares issued - stock-based compensation
2,635,000 
 
 
 
 
 
 
 
Ending Balance at Sep. 30, 2013
$ 21,994 
$ 6 
$ 18,839 
$ (1,958)
$ 5,030 
    
$ (367)
$ 444 
Ending Balance, Treasury shares at Sep. 30, 2013
34,248,949 
 
 
 
 
 
 
 
Ending Balance, Common shares at Sep. 30, 2013
633,785,385 
 
 
 
 
 
 
 
Separation and Basis of Presentation
Separation and Basis of Presentation
Separation and Basis of Presentation

The Separation
On April 4, 2012, the ConocoPhillips Board of Directors approved the separation of its downstream businesses (as defined below) into an independent, publicly traded company named Phillips 66. In accordance with the Separation and Distribution Agreement, the two companies were separated by ConocoPhillips distributing to its stockholders all 625,272,302 shares of common stock of Phillips 66 after the market closed on April 30, 2012 (the Separation). Each ConocoPhillips stockholder received one share of Phillips 66 stock for every two shares of ConocoPhillips stock. Following the Separation, ConocoPhillips retained no ownership interest in Phillips 66, and each company has had separate public ownership, boards of directors and management.

Basis of Presentation
Prior to the Separation, our results of operations, financial position and cash flows consisted of ConocoPhillips' refining, marketing and transportation operations; its natural gas gathering, processing, transmission and marketing operations, primarily conducted through its equity investment in DCP Midstream, LLC (DCP Midstream); its petrochemical operations, conducted through its equity investment in Chevron Phillips Chemical Company LLC (CPChem); its power generation operations; and an allocable portion of its corporate costs (together, the “downstream businesses”). These financial statements have been presented as if the downstream businesses had been combined for all periods presented prior to the Separation. All intercompany transactions and accounts within the downstream businesses were eliminated. The statement of income for the period prior to the Separation includes expense allocations for certain corporate functions historically performed by ConocoPhillips and not allocated to its operating segments, including allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, procurement and information technology. These allocations were based primarily on specific identification of time and/or activities associated with the downstream businesses, employee headcount or capital expenditures, and our management believes the assumptions underlying the allocations were reasonable. The combined financial statements may not necessarily reflect all of the actual expenses that would have been incurred had we been a stand-alone company during the period presented prior to the Separation. All financial information presented after the Separation represents the consolidated results of operations, financial position and cash flows of Phillips 66. Accordingly:

•
Our consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2013, consist entirely of the consolidated results of Phillips 66. Our consolidated statements of income and comprehensive income for the three months ended September 30, 2012, consist entirely of the consolidated results of Phillips 66. Our consolidated statements of income and comprehensive income for the nine months ended September 30, 2012, consist of the consolidated results of Phillips 66 for the five months ended September 30, 2012, and of the combined results of the downstream businesses for the four months ended April 30, 2012.

•
Our consolidated balance sheet at September 30, 2013, and December 31, 2012, consists of the consolidated balances of Phillips 66.

•
Our consolidated statement of cash flows for the nine months ended September 30, 2013, consists entirely of the consolidated results of Phillips 66. Our consolidated statement of cash flows for the nine months ended September 30, 2012, consists of the consolidated results of Phillips 66 for the five months ended September 30, 2012, and the combined results of the downstream businesses for the four months ended April 30, 2012.

•
Our consolidated statement of changes in equity for the nine months ended September 30, 2013, consists entirely of the consolidated results of Phillips 66. Our consolidated statement of changes in equity for the nine months ended September 30, 2012, consists of both the combined activity for the downstream businesses prior to April 30, 2012, and the consolidated activity for Phillips 66 completed at and subsequent to the Separation on April 30, 2012.

Effective January 1, 2013, we changed the organizational structure of the internal financial information reviewed by our chief executive officer, and determined this resulted in a change in the composition of our operating segments. The primary effects of this reporting reorganization were:

•
We disaggregated the former Refining and Marketing (R&M) segment into two separate operating segments titled "Refining" and "Marketing and Specialties."

•
We moved our Transportation and power businesses from the former R&M segment to the Midstream and Marketing and Specialties (M&S) segments, respectively.

The new segment alignment is presented for the three- and nine-month periods ended September 30, 2013, with the prior periods recast for comparability.
Interim Financial Information
Interim Financial Information
Interim Financial Information

The interim financial information presented in the financial statements included in this report is unaudited and includes all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of the consolidated financial position of Phillips 66 and its results of operations and cash flows for the periods presented. Unless otherwise specified, all such adjustments are of a normal and recurring nature. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Therefore, these interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our 2012 Annual Report on Form 10-K. The results of operations for the three and nine months ended September 30, 2013, are not necessarily indicative of the results to be expected for the full year.
Variable Interest Entities (VIEs)
Variable Interest Entities (VIEs)
Variable Interest Entities (VIEs)

In February 2013, we formed Phillips 66 Partners LP, a master limited partnership, to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and natural gas liquids pipelines and terminals, as well as other transportation and midstream assets. We consolidate Phillips 66 Partners as we determined that Phillips 66 Partners is a VIE and we are the primary beneficiary. As general partner, we have the ability to control the financial interests, as well as the ability to direct the activities of Phillip 66 Partners that most significantly impact its economic performance. See Note 23—Phillips 66 Partners LP for additional information.

We hold significant variable interests in VIEs that have not been consolidated because we are not considered the primary beneficiary. Information on these VIEs follows:

Merey Sweeny, L.P. (MSLP) is a limited partnership that owns a delayed coker and related facilities at the Sweeny Refinery. As discussed more fully in Note 6—Investments, Loans and Long-Term Receivables, in August 2009 a call right was exercised to acquire the 50 percent ownership interest in MSLP of the co-venturer, Petróleos de Venezuela S.A. (PDVSA). That exercise has been challenged, and the dispute is being arbitrated. Because the exercise has been challenged by PDVSA, we continue to use the equity method of accounting for MSLP, and the VIE analysis below is based on the ownership and governance structure in place prior to the exercise of the call right. MSLP is a VIE because, in securing lender consents in connection with the Separation, we provided a 100 percent debt guarantee to the lender of the 8.85% senior notes issued by MSLP. PDVSA did not participate in the debt guarantee. In our VIE assessment, this disproportionate debt guarantee, plus other liquidity support provided jointly by us and PDVSA independently of equity ownership, results in MSLP not being exposed to all potential losses. We have determined we are not the primary beneficiary while our call exercise is in dispute because under the partnership agreement the co-venturers jointly direct the activities of MSLP that most significantly impact economic performance. At September 30, 2013, our maximum exposure to loss represented the outstanding principal debt balance of $224 million. The book value of our investment in MSLP at September 30, 2013, was $78 million.

We have a 50 percent ownership interest with a 50 percent governance interest in Excel Paralubes (Excel). Excel is a VIE because, in securing lender consents in connection with the Separation, ConocoPhillips provided a 50 percent debt guarantee to the lender of the 7.43% senior secured bonds issued by Excel. We provided a full indemnity to ConocoPhillips for this debt guarantee. Our co-venturer did not participate in the debt guarantee. In our assessment of the VIE, this debt guarantee, plus other liquidity support up to $60 million provided jointly by us and our co-venturer independently of equity ownership, results in Excel not being exposed to all potential losses. We have determined we are not the primary beneficiary because we and our co-venturer jointly direct the activities of Excel that most significantly impact economic performance. We continue to use equity method accounting for this investment. At September 30, 2013, our maximum exposure to loss represented 50 percent of the outstanding principal debt balance of $140 million, or $70 million, plus half of the $60 million liquidity support, or $30 million. The book value of our investment in Excel at September 30, 2013, was $135 million.

During October 2013, we entered into a multi-year consignment fuels agreement with a marketer who we currently support with debt guarantees. Pursuant to the consignment fuels agreement, we will purchase the marketer’s fuels inventory, control the fuel marketing at each site and pay a fixed monthly fee to the marketer. We determined the consignment fuels agreement and the debt guarantees together create a variable interest in the marketer with the marketer not being exposed to all potential losses. We determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact the economic performance of the marketer or its service stations. We have no ownership interest in the marketer. Our maximum exposure to loss represented the outstanding debt balance of $190 million and the fixed annual contractual payments under the consignment fuels agreement of $80 million.
Inventories
Inventories
Inventories

Inventories consisted of the following:

 
Millions of Dollars
 
September 30
2013

 
December 31
2012

 
 
 
 
Crude oil and petroleum products
$
4,470

 
3,138

Materials and supplies
267

 
292

 
$
4,737

 
3,430




Inventories valued on the last-in, first-out (LIFO) basis totaled $4,341 million and $2,987 million at September 30, 2013, and December 31, 2012, respectively. The estimated excess of current replacement cost over LIFO cost of inventories amounted to approximately $8,000 million and $7,700 million at September 30, 2013, and December 31, 2012, respectively.

Our planned year-to-date reductions in inventory caused liquidations of LIFO inventory values. These liquidations increased net income by approximately $2 million and $19 million during the three- and nine-month periods ended September 30, 2013, and $1 million and $86 million, respectively, for the comparable periods of 2012.
Assets Held for Sale or Sold
Assets Held for Sale or Sold
Assets Held for Sale or Sold

In July 2013, we completed the sale of the Immingham Combined Heat and Power Plant (ICHP), which was included in our M&S segment. At the time of the disposition, ICHP had a net carrying value of $762 million, which primarily included $724 million of net properties, plants and equipment (PP&E), $110 million of allocated goodwill, and $111 million of deferred tax liabilities. A before-tax gain of $323 million was deferred due to an indemnity provided to the buyer. Absent claims under the indemnity, the deferred gain will be recognized into earnings as our exposure under this indemnity declines.

In May 2013, we sold our E-Gas™ Technology business. The business was included in our M&S segment and at the time of disposition had a net carrying value of approximately $13 million, including a goodwill allocation. A $48 million before-tax gain is included in the "Net gain (loss) on dispositions" line of our consolidated statement of income.

In June 2012, we sold our refinery located on the Delaware River in Trainer, Pennsylvania with a net carrying value of $38 million, including a goodwill allocation. The refinery and associated terminal and pipeline assets were included in our Refining segment. The $189 million before-tax gain is included in the “Net gain (loss) on dispositions” line of our consolidated statement of income.
Investments, Loans and Long-Term Receivables
Investments, Loans and Long-Term Receivables
Investments, Loans and Long-Term Receivables

Equity Investments
Summarized 100 percent financial information for WRB Refining LP and CPChem was as follows:
 
 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

 
 
 
 
 
 
 
 
Revenues
$
8,742

 
8,347

 
24,954

 
25,409

Income before income taxes
821

 
1,498

 
3,587

 
4,074

Net income
801

 
1,449

 
3,526

 
3,982




Loans and Long-Term Receivables
In 2012, we entered into a market-based shareholder financing agreement for up to $100 million with the Malaysian Refining Company Sdn. Bhd. (MRC), all of which was drawn as of December 31, 2012. MRC repaid this advance during the first half of 2013, and subsequently drew additional funds during the third quarter of 2013. As of September 30, 2013, the balance on the facility was $65 million. The advances to MRC are recorded as short-term related party advances with interest income recorded in equity earnings to offset the corresponding interest expense by MRC.

Other
MSLP owns a delayed coker and related facilities at the Sweeny Refinery. MSLP processes long residue, which is produced from heavy sour crude oil, for a processing fee. Fuel-grade petroleum coke is produced as a by-product and becomes the property of MSLP. Prior to August 28, 2009, MSLP was owned 50/50 by ConocoPhillips and PDVSA. Under the agreements that govern the relationships between the partners, certain defaults by PDVSA with respect to supply of crude oil to the Sweeny Refinery triggered the right to acquire PDVSA’s 50 percent ownership interest in MSLP, which was exercised on August 28, 2009. PDVSA has initiated arbitration with the International Chamber of Commerce challenging the exercise of the call right and claiming it was invalid. The arbitral tribunal held hearings on the merits of the dispute in December 2012, and post-hearing briefs were exchanged in March 2013. We expect a final ruling in the fourth quarter of 2013. We continue to use the equity method of accounting for our investment in MSLP.

On July 1, 2013, we increased our ownership interest in WRB to 50 percent by purchasing ConocoPhillips' 0.4 percent interest.
Properties, Plants and Equipment
Properties, Plants and Equipment
Properties, Plants and Equipment

Our investment in PP&E, with the associated accumulated depreciation and amortization (Accum. D&A), was:

 
Millions of Dollars
 
September 30, 2013
 
December 31, 2012
 
Gross
PP&E

 
Accum.
D&A

 
Net
PP&E

 
Gross
PP&E

 
Accum.
D&A

 
Net
PP&E

 
 
 
 
 
 
 
 
 
 
 
 
Midstream
$
2,642

 
1,081

 
1,561

 
2,460

 
1,016

 
1,444

Chemicals
—

 
—

 
—

 
—

 
—

 
—

Refining
18,894

 
6,557

 
12,337

 
17,989

 
5,913

 
12,076

Marketing and Specialties
1,425

 
738

 
687

 
2,500

 
1,078

 
1,422

Corporate and Other
930

 
438

 
492

 
880

 
415

 
465

 
$
23,891

 
8,814

 
15,077

 
23,829

 
8,422

 
15,407

Goodwill
Goodwill Disclosure [Text Block]
Goodwill

Effective January 1, 2013, we realigned our operating segments and determined that goodwill (which, prior to the realignment, had been assigned 100 percent to our former R&M segment) should now be assigned to three of the realigned operating segments—Midstream, Refining and M&S. We further determined that, for the Midstream segment, Transportation constituted a reporting unit. For the Refining and M&S segments, we determined the goodwill reporting unit was at the operating segment level, due to the economic similarities of the components of those segments.

Goodwill was reassigned to the realigned reporting units using a relative fair value approach. Goodwill impairment testing was completed and no impairment recognition was required.

In May 2013, $110 million of goodwill within the M&S segment was allocated to an asset held for sale. The associated sale was completed in July 2013. See Note 5—Assets Held for Sale or Sold for additional information.

The carrying amount of goodwill was as follows:

 
Millions of Dollars
 
September 30
2013

 
December 31
2012

 
 
 
 
Midstream
$
518

 
518

Refining
1,933

 
1,934

Marketing and Specialties
777

 
892

 
$
3,228

 
3,344

Impairments
Impairments
Impairments

The three- and nine-month periods ended September 30, 2013 and 2012, included the following before-tax impairment charges:

 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012


 
 
 
 
 
 
 
Midstream
$
—

 
248

 
—

 
524

Refining
1

 
—

 
2

 
42

Marketing and Specialties
—

 
—

 
15

 
—

Corporate and Other
—

 
—

 
9

 
—

 
$
1

 
248

 
26

 
566




During the nine-month period of 2013, we recorded a $15 million held-for-use impairment in our M&S segment, primarily related to PP&E associated with our planned exit from the composite graphite business.

During the third quarter of 2012, we recorded an impairment of $43 million on the Riverhead Terminal in our Midstream segment. During the same period, we recorded an incremental impairment of $205 million in our Midstream segment related to our investment in Rockies Express Pipeline LLC. The total impairment charges related to this investment during the nine-month period of 2012 were $480 million. In addition, the nine-month period of 2012 included a $42 million held-for-sale impairment in our Refining segment related to equipment formerly associated with the canceled Wilhelmshaven Refinery upgrade project.
Earnings Per Share
Earnings Per Share
Earnings Per Share

The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, reduced by noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced only by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.

On April 30, 2012, 625.3 million shares of our common stock were distributed to ConocoPhillips stockholders in conjunction with the Separation. For comparative purposes, and to provide a more meaningful calculation of weighted-average shares outstanding, we have assumed this amount to be outstanding as of the beginning of each period prior to the Separation presented in the calculation of weighted-average shares. In addition, we have assumed the fully vested stock and unit awards outstanding at April 30, 2012, were also outstanding for each of the periods presented prior to the Separation; and we have assumed the dilutive securities outstanding at April 30, 2012, were also outstanding for each period prior to the Separation.

 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

Basic EPS Calculation
 
 
 
 
 
 
 
Allocation of earnings (millions):
 
 
 
 
 
 
 
Net income attributable to Phillips 66
$
535

 
1,599

 
2,900

 
3,416

Income allocated to participating securities
(2
)
 
(1
)
 
(4
)
 
(1
)
Income available to common stockholders
$
533

 
1,598

 
2,896

 
3,415

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (thousands):
Basic
608,934

 
630,672

 
617,654

 
628,940

 
 
 
 
 
 
 
 
Basic EPS (dollars)
$
0.88

 
2.53

 
4.69

 
5.43

 
 
 
 
 
 
 
 
Diluted EPS Calculation
 
 
 
 
 
 
 
Allocation of earnings (millions):
 
 
 
 
 
 
 
Net income attributable to Phillips 66
$
535

 
1,599

 
2,900

 
3,416

Income allocated to participating securities
—

 
—

 
—

 
—

Income available to common stockholders
$
535

 
1,599

 
2,900

 
3,416

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (thousands):
Basic
608,934

 
630,672

 
617,654

 
628,940

Dilutive effect of stock-based compensation
5,585

 
7,241

 
6,192

 
7,645

Weighted-average diluted common shares outstanding
614,519

 
637,913

 
623,846

 
636,585

 
 
 
 
 
 
 
 
Diluted EPS (dollars)
$
0.87

 
2.51

 
4.65

 
5.37

Debt
Debt
Debt

During the second quarter of 2013, we amended our revolving credit agreement by entering into the First Amendment to Credit Agreement (Amendment). The Amendment increased the borrowing capacity from $4.0 billion to $4.5 billion, extended the maturity from February 2017 to June 2018, reduced the margin applied to interest and fees accruing on and after the Amendment effective date, and made certain amendments with respect to Phillips 66 Partners.

Also during the second quarter of 2013, we amended our trade receivables securitization facility by entering into the First Amendment to Receivables Purchase Agreement (Securitization Amendment). The Securitization Amendment decreased the borrowing capacity from $1.2 billion to $696 million and made certain amendments with respect to Phillips 66 Partners.

On June 7, 2013, Phillips 66 Partners entered into a senior unsecured $250 million revolving credit agreement (Revolver) with a syndicate of financial institutions. On July 26, 2013, Phillips 66 Partners, in connection with its initial public offering of common units, closed on the facility. Phillips 66 Partners has the option to increase the overall capacity of the Revolver by up to an additional $250 million, subject to certain conditions. The Revolver has an initial term of five years. As of September 30, 2013, no amount had been drawn under this facility.

During the third quarter of 2013, we entered into a capital lease which resulted in $177 million of debt being included on the balance sheet at September 30, 2013. For additional information, see Note 16—Leases.

We have no material scheduled debt maturities in 2013; however, in June 2013 we made a $500 million prepayment on our term loan and, in September 2013, prepaid the remaining balance of $500 million.

At both September 30, 2013, and December 31, 2012, we had no direct outstanding borrowings under our revolving credit agreement or our trade receivables securitization facility. However, as of both September 30, 2013, and December 31, 2012, $51 million in letters of credit had been issued that were supported by our revolving credit agreement. As of September 30, 2013, and December 31, 2012, $26 million and $166 million, respectively, in letters of credit had been issued that were collateralized by trade receivables held by a subsidiary under our trade receivables securitization facility. Accordingly, as of September 30, 2013, we had an aggregate $5.1 billion of total capacity available under these facilities.
Guarantees
Guarantees
Guarantees

At September 30, 2013, we were liable for certain contingent obligations under various contractual arrangements as described below. We recognize a liability, at inception, for the fair value of our obligation as a guarantor for newly issued or modified guarantees. Unless the carrying amount of the liability is noted below, we have not recognized a liability either because the guarantees were issued prior to December 31, 2002, or because the fair value of the obligation is immaterial. In addition, unless otherwise stated, we are not currently performing with any significance under the guarantee and expect future performance to be either immaterial or have only a remote chance of occurrence.

Guarantees of Joint Venture Debt
In April 2012, in connection with the Separation, we issued a guarantee for 100 percent of the 8.85% senior notes issued by MSLP in July 1999. At September 30, 2013, the maximum potential amount of future payments to third parties under the guarantee is estimated to be $224 million, which could become payable if MSLP fails to meet its obligations under the senior notes agreement. The senior notes mature in 2019.

At September 30, 2013, we had other guarantees outstanding for our portion of certain joint venture debt obligations, which have terms of up to 12 years. The maximum potential amount of future payments under the guarantees is approximately $105 million. Payment would be required if a joint venture defaults on its debt obligations.

Other Guarantees
We have residual value guarantees associated with leases with maximum future potential payments totaling approximately $246 million. We have other guarantees with maximum future potential payment amounts totaling $293 million, which consist primarily of guarantees to fund the short-term cash liquidity deficits of certain joint ventures, guarantees of third parties related to prior asset dispositions, and guarantees of the lease payment obligations of a joint venture. These guarantees generally extend up to 11 years or life of the venture.

Indemnifications
Over the years, we have entered into various agreements to sell ownership interests in certain corporations, joint ventures and assets that gave rise to qualifying indemnifications. Agreements associated with these sales include indemnifications for taxes, litigation, environmental liabilities, permits and licenses, supply arrangements, and employee claims; and real estate indemnities against tenant defaults. The terms of these indemnifications vary greatly. The majority of these indemnifications are related to environmental issues, the term is generally indefinite, and the maximum amount of future payments is generally unlimited. The carrying amount recorded for indemnifications at September 30, 2013, was $270 million. We amortize the indemnification liability over the relevant time period, if one exists, based on the facts and circumstances surrounding each type of indemnity. In cases where the indemnification term is indefinite, we will reverse the liability when we have information the liability is essentially relieved or amortize the liability over an appropriate time period as the fair value of our indemnification exposure declines. Although it is reasonably possible future payments may exceed amounts recorded, due to the nature of the indemnifications, it is not possible to make a reasonable estimate of the maximum potential amount of future payments. Included in the recorded carrying amount were $121 million of environmental accruals for known contamination that are included in asset retirement obligations and accrued environmental costs at September 30, 2013. For additional information about environmental liabilities, see Note 13—Contingencies and Commitments.

Indemnification and Release Agreement
In conjunction with, and effective as of, the Separation, we entered into the Indemnification and Release Agreement with ConocoPhillips. This agreement governs the treatment between ConocoPhillips and us of aspects relating to indemnification, insurance, litigation responsibility and management, and litigation document sharing and cooperation arising in connection with the Separation. Generally, the agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of ConocoPhillips’ business with ConocoPhillips. The agreement also establishes procedures for handling claims subject to indemnification and related matters.
Contingencies and Commitments
Contingencies and Commitments
Contingencies and Commitments

A number of lawsuits involving a variety of claims that arose in the ordinary course of business have been filed against us or are subject to indemnifications provided by us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various active and inactive sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we record receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes.

Environmental
We are subject to international, federal, state and local environmental laws and regulations. When we prepare our consolidated financial statements, we record accruals for environmental liabilities based on management’s best estimates, using all information available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency (EPA) or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable.

Although liability of those potentially responsible for environmental remediation costs is generally joint and several for federal sites and frequently so for state sites, we are usually only one of many companies alleged to have liability at a particular site. Due to the joint and several liabilities, we could be responsible for all cleanup costs related to any site at which we have been designated as a potentially responsible party. We have been successful to date in sharing cleanup costs with other financially sound companies. Many of the sites at which we are potentially responsible are still under investigation by the EPA or the state agencies concerned. Prior to actual cleanup, those potentially responsible normally assess the site conditions, apportion responsibility and determine the appropriate remediation. In some instances, we may have no liability or may attain a settlement of liability. Where it appears that other potentially responsible parties may be financially unable to bear their proportional share, we consider this inability in estimating our potential liability, and we adjust our accruals accordingly. As a result of various acquisitions in the past, we assumed certain environmental obligations. Some of these environmental obligations are mitigated by indemnifications made by others for our benefit and some of the indemnifications are subject to dollar and time limits.

We are currently participating in environmental assessments and cleanups at numerous federal Superfund and comparable state sites. After an assessment of environmental exposures for cleanup and other costs, we make accruals on an undiscounted basis (except those acquired in a purchase business combination, which we record on a discounted basis) for planned investigation and remediation activities for sites where it is probable future costs will be incurred and these costs can be reasonably estimated. At September 30, 2013, our consolidated balance sheet included a total environmental accrual of $505 million, compared with $530 million at December 31, 2012. We expect to incur a substantial amount of these expenditures within the next 30 years. We have not reduced these accruals for possible insurance recoveries. In the future, we may be involved in additional environmental assessments, cleanups and proceedings.

Legal Proceedings
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us to track those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.

Other Contingencies
We have contingent liabilities resulting from throughput agreements with pipeline and processing companies not associated with financing arrangements. Under these agreements, we may be required to provide any such company with additional funds through advances and penalties for fees related to throughput capacity not utilized.

At September 30, 2013, we had performance obligations secured by letters of credit of $1,337 million (of which $26 million were issued under the trade receivables securitization facility, $51 million were issued under the provisions of our revolving credit facility, and the remainder were issued as direct bank letters of credit) related to various purchase and other commitments incident to the ordinary conduct of business.
Derivatives and Financial Instruments
Derivatives and Financial Instruments
Derivatives and Financial Instruments

Derivative Instruments
We use financial and commodity-based derivative contracts to manage exposures to fluctuations in foreign currency exchange rates and commodity prices or to capture market opportunities. Since we are not currently using cash-flow hedge accounting, all gains and losses, realized or unrealized, from commodity derivative contracts have been recognized in the consolidated statement of income. Gains and losses from derivative contracts held for trading not directly related to our physical business, whether realized or unrealized, have been reported net in “Other income (loss)” on our consolidated statement of income. Cash flows from all derivative activity for the periods presented appear in the operating section of the consolidated statement of cash flows.

Purchase and sales contracts with fixed minimum notional volumes for commodities that are readily convertible to cash (e.g., crude oil and gasoline) are recorded on the balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception (i.e., contracts to purchase or sell quantities we expect to use or sell over a reasonable period in the normal course of business). We generally apply this normal purchases and normal sales exception to eligible crude oil, refined product, natural gas and power commodity purchase and sales contracts; however, we may elect not to apply this exception (e.g., when another derivative instrument will be used to mitigate the risk of the purchase or sales contract but hedge accounting will not be applied, in which case both the purchase or sales contract and the derivative contract mitigating the resulting risk will be recorded on the balance sheet at fair value).

Our derivative instruments are held at fair value on our consolidated balance sheet. For further information on the fair value of derivatives, see Note 15—Fair Value Measurements.

Commodity Derivative Contracts—We operate in the worldwide crude oil, refined products, natural gas liquids (NGL), natural gas and electric power markets and are exposed to fluctuations in the prices for these commodities. These fluctuations can affect our revenues, as well as the cost of operating, investing and financing activities. Generally, our policy is to remain exposed to the market prices of commodities; however, we use futures, forwards, swaps and options in various markets to balance physical systems, meet customer needs, manage price exposures on specific transactions, and do a limited, immaterial amount of trading not directly related to our physical business. We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades. Derivatives may be used to optimize these activities, which may move our risk profile away from market average prices.

The following table indicates the balance sheet line items that include the fair values of commodity derivative assets and liabilities presented net (i.e., commodity derivative assets and liabilities with the same counterparty are netted where the right of setoff exists); however, the balances in the following table are presented gross. For information on the impact of counterparty netting and collateral netting, see Note 15—Fair Value Measurements.
 
 
Millions of Dollars
 
September 30
2013

 
December 31
2012

Assets
 
 
 
Prepaid expenses and other current assets
$
1,026

 
767

Other assets
11

 
3

Liabilities
 
 
 
Other accruals
1,038

 
766

Other liabilities and deferred credits
8

 
3

Hedge accounting has not been used for any items in the table.


The gains (losses) from commodity derivatives incurred, and the line items where they appear on our consolidated statement of income, were:
 
 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

 
 
 
 
 
 
 
 
Sales and other operating revenues
$
(44
)
 
(232
)
 
74

 
(48
)
Equity in earnings of affiliates
(12
)
 
5

 
(13
)
 
5

Other income (loss)
(24
)
 
(9
)
 
3

 
44

Purchased crude oil and products
(78
)
 
(86
)
 
85

 
7

Hedge accounting has not been used for any item in the table.


The table below summarizes our material net exposures resulting from outstanding commodity derivative contracts. These financial and physical derivative contracts are primarily used to manage price exposure on our underlying operations. The underlying exposures may be from non-derivative positions such as inventory volumes. Financial derivative contracts may also offset physical derivative contracts, such as forward sales contracts. As of September 30, 2013, and December 31, 2012, the percentage of our derivative contract volume expiring within the next 12 months was 99 percent for both periods.
 
 
Open Position
Long/(Short)
 
September 30
2013

 
December 31
2012

Commodity
 
 
 
Crude oil, refined products and NGL (millions of barrels)
(25
)
 
(8
)



Credit Risk
Financial instruments potentially exposed to concentrations of credit risk consist primarily of over-the-counter (OTC) derivative contracts and trade receivables.

The credit risk from our OTC derivative contracts, such as forwards and swaps, 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 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 the sale of products from, or related to, our refinery 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. We continually monitor this exposure and the creditworthiness of the counterparties and recognize bad debt expense based on historical write-off experience or specific counterparty collectability. Generally, we do not require collateral to limit the exposure to loss; however, we will sometimes use letters of credit, prepayments and 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 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 our credit ratings fall below investment grade. Cash is the primary collateral in all contracts; however, many contracts also permit us to post letters of credit as collateral.

The aggregate fair values of all derivative instruments with such credit-risk-related contingent features that were in a liability position were not material at September 30, 2013, or December 31, 2012.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

Fair Values of Financial Instruments
We used the following methods and assumptions to estimate the fair value of financial instruments:

•
Cash and cash equivalents: The carrying amount reported on the balance sheet approximates fair value.
•
Accounts and notes receivable: The carrying amount reported on the balance sheet approximates fair value.
•
Debt: The carrying amount of our floating-rate debt approximates fair value. The fair value of our fixed-rate debt is estimated based on quoted market prices.
•
Commodity swaps: Fair value is estimated based on forward market prices and approximates the exit price at period end. When forward market prices are not available, fair value is estimated using the forward prices of a similar commodity with adjustments for differences in quality or location.
•
Futures: Fair values are based on quoted market prices obtained from the New York Mercantile Exchange, the InterContinental Exchange Futures or other traded exchanges.
•
Forward-exchange contracts: Fair values are estimated by comparing the contract rate to the forward rate in effect at the end of the respective reporting periods and approximating the exit price at those dates.

We carry certain assets and liabilities at fair value, which we measure at the reporting date using an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability), and disclose the quality of these fair values based on the valuation inputs used in these measurements under the following hierarchy:

•
Level 1: Fair value measured with unadjusted quoted prices from an active market for identical assets or liabilities.

•
Level 2: Fair value measured with: 1) adjusted quoted prices from an active market for similar assets; or 2) other valuation inputs that are directly or indirectly observable.

•
Level 3: Fair value measured with unobservable inputs that are significant to the measurement.

We classify the fair value of an asset or liability based on the lowest level of input significant to its measurement; however, the fair value of an asset or liability initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement or corroborating market data becomes available. Conversely, an asset or liability initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable. We made no material transfers in or out of Level 1 during the nine-month periods ending September 30, 2013 and 2012.

Recurring Fair Value Measurements
Financial assets and liabilities recorded at fair value on a recurring basis consist primarily of investments to support nonqualified deferred compensation plans and derivative instruments. The deferred compensation investments are measured at fair value using unadjusted prices available from national securities exchanges; therefore, these assets are categorized as Level 1 in the fair value hierarchy. We value our exchange-traded commodity derivatives using closing prices provided by the exchange as of the balance sheet date, and these are also classified as Level 1 in the fair value hierarchy. When exchange-cleared contracts lack sufficient liquidity or are valued using either adjusted exchange-provided prices or non-exchange quotes, we classify those contracts as Level 2. OTC financial swaps and physical commodity forward purchase and sales contracts are generally valued using quotations provided by brokers and price index developers such as Platts and Oil Price Information Service. We corroborate these quotes with market data and classify the resulting fair values as Level 2. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, OTC swaps and physical commodity purchase and sales contracts are valued using internally developed methodologies that consider historical relationships among various commodities that result in management’s best estimate of fair value. We classify these contracts as Level 3. Financial OTC and physical commodity options are valued using industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and contractual prices for the underlying instruments, as well as other relevant economic measures. The degree to which these inputs are observable in the forward markets determines whether the options are classified as Level 2 or 3. We use a mid-market pricing convention (the mid-point between bid and ask prices). When appropriate, valuations are adjusted to reflect credit considerations, generally based on available market evidence.

The following tables display the fair value hierarchy for our material financial assets and liabilities either accounted for or disclosed at fair value on a recurring basis. These values are determined by treating each contract as the fundamental unit of account; therefore, derivative assets and liabilities with the same counterparty are shown gross (i.e., without the effect of netting where the legal right of setoff exists) in the hierarchy sections of these tables. These tables also show that our Level 3 activity was not material.

We have master netting arrangements for all of our exchange-cleared derivative instruments, the majority of our OTC derivative instruments, and certain physical commodity forward contracts (primarily pipeline crude oil deliveries). The following tables show these contracts on a net basis in the column “Effect of Counterparty Netting.” We have no contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

The carrying values and fair values by hierarchy of our material financial instruments, either carried or disclosed at fair value, and derivative assets and liabilities, including any effects of master netting agreements or collateral, were:

 
Millions of Dollars
 
September 30, 2013
 
Fair Value Hierarchy
 
Total Fair Value of Gross Assets & Liabilities

Effect of Counterparty Netting

Effect of Collateral Netting

Difference in Carrying Value and Fair Value

Net Carrying Value Presented on the Balance Sheet

Cash Collateral Received or Paid, Not Offset on Balance Sheet

 
Level 1

 
Level 2

 
Level 3

Commodity Derivative Assets
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
692

 
268

 
—

 
960

(931
)
(1
)
—

28

—

OTC instruments
—

 
25

 
—

 
25

(11
)
—

—

14

—

Physical forward contracts*
—

 
47

 
5

 
52

(1
)
—

—

51

—

Rabbi trust assets
61

 
—

 
—

 
61

N/A

N/A

—

61

N/A

 
$
753

 
340

 
5

 
1,098

(943
)
(1
)
—

154

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
705

 
249

 
—

 
954

(931
)
(23
)
—

—

—

OTC instruments
—

 
39

 
—

 
39

(11
)
—

—

28

—

Physical forward contracts*
—

 
52

 
1

 
53

(1
)
—

—

52

—

Floating-rate debt
50

 
—

 
—

 
50

N/A

N/A

—

50

N/A

Fixed-rate debt, excluding capital leases**
—

 
6,102

 
—

 
6,102

N/A

N/A

(193
)
5,909

N/A

 
$
755

 
6,442

 
1

 
7,198

(943
)
(23
)
(193
)
6,039


*Physical forward contracts may have a larger value on the balance sheet than disclosed in the fair value hierarchy when the remaining contract term at the reporting date is greater than 12 months and the short-term portion is an asset while the long-term portion is a liability, or vice versa.
**We carry fixed-rate debt on the balance sheet at amortized cost.


 
Millions of Dollars
 
December 31, 2012
 
Fair Value Hierarchy
 
Total Fair Value of Gross Assets & Liabilities

Effect of Counterparty Netting

Effect of Collateral Netting

Difference in Carrying Value and Fair Value

Net Carrying Value Presented on the Balance Sheet

Cash Collateral Received or Paid, Not Offset on Balance Sheet

 
Level 1

 
Level 2

 
Level 3

 
Commodity Derivative Assets
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
380

 
309

 
—

 
689

(672
)
(8
)
—

9

—

OTC instruments
—

 
15

 
—

 
15

(7
)
—

—

8

—

Physical forward contracts*
—

 
61

 
2

 
63

4

—

—

67

—

Rabbi trust assets
50

 
—

 
—

 
50

N/A

N/A

—

50

N/A

 
$
430

 
385

 
2

 
817

(675
)
(8
)
—

134



 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
393

 
328

 
—

 
721

(672
)
(42
)
—

7

(7
)
OTC instruments
—

 
13

 
—

 
13

(7
)
—

—

6

—

Physical forward contracts*
—

 
31

 
1

 
32

4

—

—

36

—

Floating-rate debt
1,050

 
—

 
—

 
1,050

N/A

N/A

—

1,050

N/A

Fixed-rate debt, excluding capital leases**
—

 
6,508

 
—

 
6,508

N/A

N/A

(590
)
5,918

N/A

 
$
1,443

 
6,880

 
1

 
8,324

(675
)
(42
)
(590
)
7,017


*Physical forward contracts may have a larger value on the balance sheet than disclosed in the fair value hierarchy when the remaining contract term at the reporting date is greater than 12 months and the short-term portion is an asset while the long-term portion is a liability, or vice versa.
**We carry fixed-rate debt on the balance sheet at amortized cost.

Nonrecurring Fair Value Remeasurements
The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition during the nine-month periods ended September 30, 2013 and 2012:

 
Millions of Dollars
 
 
 
Fair Value
Measurements Using
 
 
 
Fair Value*

 
Level 1
Inputs

 
Level 2
Inputs

 
Level 3
Inputs

 
Before-
Tax Loss

September 30, 2013
 
 
 
 
 
 
 
 
 
Net properties, plants and equipment (held for use)
$
22

 
22

 
—

 
—

 
27

 
 
 
 
 
 
 
 
 
 
September 30, 2012
 
 
 
 
 
 
 
 
 
Net properties, plants and equipment (held for use)
$
33

 
33

 
—

 
—

 
43

Net properties, plants and equipment (held for sale)
32

 
32

 
—

 
—

 
42

Equity method investment
283

 
—

 
—

 
283

 
480

*Represents the fair value at the time of the impairment.


During the nine-month period ended September 30, 2013, net PP&E held for use related to the composite graphite business in our M&S segment, with a carrying amount of $18 million, was written down to its fair value, resulting in a before-tax loss of $18 million. Fair value was based on an internal assessment of expected discounted future cash flows. During this same period, Corporate net PP&E with a carrying amount of $31 million was written down to its fair value of $22 million, resulting in a before-tax loss of $9 million. The fair value was primarily determined by a third-party valuation.
 
During the nine-month period ended September 30, 2012, net PP&E held for use related to a terminal and storage facility, with a carrying amount of $76 million, was written down to its fair value of $33 million, resulting in a before-tax loss of $43 million. In addition, net PP&E held for sale related to equipment formerly associated with a canceled refinery upgrade project, with a carrying amount of $74 million, was written down to its fair value of $32 million, resulting in a before-tax loss of $42 million. The fair values in each case were primarily determined by negotiated selling prices with third parties. During this same period, our investment in a natural gas transmission pipeline was written down to a fair value of $283 million, resulting in a before-tax loss of $480 million. The fair value was determined principally by the application of an internal discounted cash flow model using estimates of future production, prices, costs and a discount rate believed to be consistent with those used by principal market participants. The decline in the fair value was considered to be other than temporary.
Leases
Capital Leases in Financial Statements of Lessee Disclosure [Text Block]
Leases

In August 2013, we entered into a 20-year capital lease to continue our use of an oil terminal in the United Kingdom. At September 30, 2013, $177 million of PP&E and debt obligations were recorded for this lease. Future minimum lease payments under this lease are: 2014—$5 million; 2015—$6 million; 2016—$6 million; 2017—$7 million; 2018—$7 million; and 2019 and after—$144 million. In 2013, total payments under this lease are estimated to be $2 million.
Employee Benefit Plans
Employee Benefit Plans
Employee Benefit Plans

Pension and Postretirement Plans
Prior to the Separation, certain of our U.S. and U.K. employees participated in defined benefit pension plans and postretirement benefit plans (Shared Plans) sponsored by ConocoPhillips, which included participants of other ConocoPhillips subsidiaries. We accounted for such Shared Plans as multiemployer benefit plans. Accordingly, we did not record an asset or liability to recognize the funded status of the Shared Plans on our consolidated balance sheet until the Separation, at which time, the assets and liabilities of the Shared Plans which were allocable to our employees were transferred to us and we became the sponsor of the plans.

The allocated benefit cost from Shared Plans, as well as the components of net periodic benefit cost associated with plans sponsored by us for the three and nine months ended September 30, 2013 and 2012, are shown in the table below:
 
 
Millions of Dollars
 
Pension Benefits
 
Other Benefits
 
2013
 
2012
 
2013

 
2012

 
U.S.

 
Int’l.

 
U.S.

 
Int’l.

 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
31

 
9

 
30

 
7

 
2

 
1

Interest cost
23

 
7

 
25

 
8

 
2

 
2

Expected return on plan assets
(30
)
 
(7
)
 
(30
)
 
(7
)
 
—

 
—

Amortization of prior service cost
1

 
—

 
—

 
—

 
—

 
—

Recognized net actuarial loss (gain)
21

 
4

 
19

 
2

 
—

 
(1
)
Subtotal net periodic benefit cost
46

 
13

 
44

 
10

 
4

 
2

Allocated benefit cost from ConocoPhillips
—

 
—

 
—

 
—

 
—

 
—

Total net periodic benefit cost
$
46

 
13

 
44

 
10

 
4

 
2

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
93

 
27

 
51

 
14

 
6

 
2

Interest cost
69

 
23

 
41

 
17

 
5

 
3

Expected return on plan assets
(90
)
 
(22
)
 
(50
)
 
(14
)
 
—

 
—

Amortization of prior service cost (credit)
2

 
(1
)
 
1

 
—

 
(1
)
 
—

Recognized net actuarial loss (gain)
63

 
12

 
31

 
5

 
—

 
(1
)
Subtotal net periodic benefit cost
137

 
39

 
74

 
22

 
10

 
4

Allocated benefit cost from ConocoPhillips
—

 
—

 
71

 
13

 
—

 
7

Total net periodic benefit cost
$
137

 
39

 
145

 
35

 
10

 
11




During the first nine months of 2013, we contributed $136 million to our U.S. plans and $36 million to our international plans. We currently expect to make additional contributions of approximately $20 million in the fourth quarter of 2013, primarily to our international plans.
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)

The following table depicts changes in accumulated other comprehensive loss by component, as well as detail on reclassifications out of accumulated other comprehensive loss:
 
 
Millions of Dollars
 
Defined Benefit Plans

 
Foreign Currency Translation

 
Hedging

 
Accumulated Other Comprehensive Loss

 
 
 
 
 
 
 
 
December 31, 2012
$
(778
)
 
466

 
(2
)
 
(314
)
Other comprehensive income (loss) before reclassifications
(1
)
 
(99
)
 
1

 
(99
)
Amounts reclassified from accumulated other comprehensive income (loss)*
 
 
 
 
 
 


Amortization of defined benefit plan items**
 
 
 
 
 
 
 
Actuarial losses
46

 
—

 
—

 
46

Net current period other comprehensive income (loss)
45

 
(99
)
 
1

 
(53
)
September 30, 2013
$
(733
)
 
367

 
(1
)
 
(367
)
*There were no significant reclassifications related to foreign currency translation or hedging.
**These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost (see Note 17—Employee Benefit Plans, for additional information).
Cash Flow Information
Cash Flow Information
Cash Flow Information
 
 
Millions of Dollars
 
Nine Months Ended
 
September 30
 
2013

 
2012

Noncash Investing and Financing Activities
 
 
 
Increase in net PP&E and debt related to capital lease obligation
$
177

 
—

Transfer of net PP&E in accordance with the Separation and Distribution Agreement with ConocoPhillips
—

 
374

Transfer of employee benefit obligations in accordance with the Separation and Distribution Agreement with ConocoPhillips
—

 
1,234

Increase in deferred tax assets associated with the employee benefit liabilities transferred in accordance with the Separation and Distribution Agreement with ConocoPhillips
—

 
461

 
 
 
 
Cash Payments
 
 
 
Interest
$
146

 
28

Income taxes*
1,001

 
927

*Excludes our share of cash tax payments made directly by ConocoPhillips prior to the Separation.
Related Party Transactions
Related Party Transactions
Related Party Transactions

Significant transactions with related parties were:

 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

 
 
 
 
 
 
 
 
Operating revenues and other income (a)
$
2,064

 
1,883

 
5,866

 
6,119

Purchases (b)
4,998

 
4,176

 
13,762

 
18,984

Operating expenses and selling, general and administrative expenses (c)
28

 
32

 
80

 
175

Interest expense (d)
2

 
2

 
6

 
6


(a)
We sold crude oil to MRC. NGL and other petrochemical feedstocks, along with solvents, were sold to CPChem, and gas oil and hydrogen feedstocks were sold to Excel. Certain feedstocks and intermediate products were sold to WRB. We also acted as agent for WRB in supplying other crude oil and feedstocks, wherein the transactional amounts did not impact operating revenues. In addition, we charged several of our affiliates, including CPChem and MSLP, for the use of common facilities, such as steam generators, waste and water treaters, and warehouse facilities.

(b)
We purchased refined products from WRB. We also acted as agent for WRB in distributing asphalt and solvents, wherein the transactional amounts did not impact purchases. We purchased natural gas and NGL from DCP Midstream and CPChem for use in our refinery processes and other feedstocks from various affiliates. We purchased refined products from MRC. We also paid fees to various pipeline equity companies for transporting finished refined products. In addition, we paid a price upgrade to MSLP for heavy crude processing. We purchased base oils and fuel products from Excel for use in our refining and specialty businesses.

(c)
We paid utility and processing fees to various affiliates.

(d)
We incurred interest expense on a note payable to MSLP. See Note 6—Investments, Loans and Long-Term Receivables, for additional information on loans to affiliated companies.

Also included in the table above are transactions with ConocoPhillips through April 30, 2012, prior to the Separation. These transactions include crude oil purchased from ConocoPhillips as feedstock for our refineries and power sold to ConocoPhillips from our power generation facilities. Sales to and purchases from ConocoPhillips, while it was a related party, were $381 million and $5,328 million, respectively, for the nine months ended September 30, 2012.

For the period prior to the Separation, the consolidated statement of income includes expense allocations for certain corporate functions historically performed by ConocoPhillips and not allocated to its operating segments, including allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, procurement and information technology. Net charges from ConocoPhillips for these services, reflected in selling, general and administrative expenses, were $70 million for the nine months ended September 30, 2012.
Income Taxes
Income Taxes
Income Taxes

Our effective tax rate for the third quarter and first nine months of 2013 was 35 percent and 34 percent, respectively, compared with 35 percent and 37 percent for the corresponding periods of 2012. The decrease in the effective tax rate for the first nine months of 2013 was primarily due to the absence of U.S. income tax expense on foreign dividends, the majority of which was recorded as a result of corporate restructuring to effectuate the Separation.
Phillips 66 Partners LP
Phillips 66 Partners LP
Phillips 66 Partners LP

Initial Public Offering of Phillips 66 Partners LP
In February 2013, we formed Phillips 66 Partners, a master limited partnership, to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum product and natural gas liquids pipelines and terminals, as well as other transportation and midstream assets. On July 26, 2013, Phillips 66 Partners closed its initial public offering of 18,888,750 common units at a price of $23.00 per unit, which included a 2,463,750 common unit over-allotment option that was fully exercised by the underwriters. Phillips 66 Partners received $404 million in net proceeds from the sale of the units, after deducting underwriting discounts, commissions, structuring fees and offering expenses. Headquartered in Houston, Texas, Phillips 66 Partners' initial assets consist of crude oil and refined petroleum product pipeline, terminal, and storage systems in the Central and Gulf Coast regions of the United States, each of which is integral to a connected Phillips 66-operated refinery.

We own a 71.7 percent limited partner interest and a 2.0 percent general partner interest in Phillips 66 Partners, while the public owns a 26.3 percent limited partner interest. We consolidate Phillips 66 Partners as a variable interest entity for financial reporting purposes (see Note 3—Variable Interest Entities (VIEs) for additional information). The public's ownership interest in Phillips 66 Partners is reflected as a noncontrolling interest in our financial statements, including $408 million in the equity section of our consolidated balance sheet as of September 30, 2013. Phillips 66 Partners' cash and cash equivalents at September 30, 2013, were $422 million.
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information

Our $5.8 billion of Senior Notes were issued by Phillips 66, and are guaranteed by Phillips 66 Company, a 100-percent-owned subsidiary. Phillips 66 Company has fully and unconditionally guaranteed the payment obligations of Phillips 66 with respect to these debt securities. The following condensed consolidating financial information presents the results of operations, financial position and cash flows for:

•
Phillips 66 and Phillips 66 Company (in each case, reflecting investments in subsidiaries utilizing the equity method of accounting).

•
All other nonguarantor subsidiaries.

•
The consolidating adjustments necessary to present Phillips 66's results on a consolidated basis.

This condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes.
 
Millions of Dollars
 
Three Months Ended September 30, 2013
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

29,196

15,005

—

44,201

Equity in earnings of affiliates
579

786

166

(884
)
647

Net gain on dispositions
—

8

—

—

8

Other income (loss)
(1
)
(13
)
7

—

(7
)
Intercompany revenues
—

258

5,482

(5,740
)
—

Total Revenues and Other Income
578

30,235

20,660

(6,624
)
44,849

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

26,864

17,506

(5,624
)
38,746

Operating expenses
—

815

178

(6
)
987

Selling, general and administrative expenses
1

244

133

(24
)
354

Depreciation and amortization
—

182

54

—

236

Impairments
—

1

—

—

1

Taxes other than income taxes
—

1,324

2,301

(1
)
3,624

Accretion on discounted liabilities
—

4

2

—

6

Interest and debt expense
66

4

83

(85
)
68

Foreign currency transaction losses
—

1

—

—

1

Total Costs and Expenses
67

29,439

20,257

(5,740
)
44,023

Income before income taxes
511

796

403

(884
)
826

Provision (benefit) for income taxes
(24
)
217

93

—

286

Net income
535

579

310

(884
)
540

Less: net income attributable to noncontrolling interests
—

—

5

—

5

Net Income Attributable to Phillips 66
$
535

579

305

(884
)
535

 
 
 
 
 
 
Comprehensive Income
$
734

777

495

(1,267
)
739


 
Millions of Dollars
 
Three Months Ended September 30, 2012
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

28,495

14,450

—

42,945

Equity in earnings of affiliates
1,652

1,071

161

(1,925
)
959

Net loss on dispositions
—

(1
)
—

—

(1
)
Other income (loss)
—

6

(2
)
—

4

Intercompany revenues
1

551

6,192

(6,744
)
—

Total Revenues and Other Income
1,653

30,122

20,801

(8,669
)
43,907

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

25,037

17,859

(6,707
)
36,189

Operating expenses
—

725

171

(12
)
884

Selling, general and administrative expenses
2

333

119

(22
)
432

Depreciation and amortization
—

170

59

—

229

Impairments
—

44

204

—

248

Taxes other than income taxes
—

1,302

2,109

(1
)
3,410

Accretion on discounted liabilities
—

6

1

—

7

Interest and debt expense
71

4

1

(2
)
74

Foreign currency transaction gains
—

—

(15
)
—

(15
)
Total Costs and Expenses
73

27,621

20,508

(6,744
)
41,458

Income before income taxes
1,580

2,501

293

(1,925
)
2,449

Provision (benefit) for income taxes
(19
)
849

18

—

848

Net income
1,599

1,652

275

(1,925
)
1,601

Less: net income attributable to noncontrolling interests
—

—

2

—

2

Net Income Attributable to Phillips 66
$
1,599

1,652

273

(1,925
)
1,599

 
 
 
 
 
 
Comprehensive Income
$
1,827

1,880

487

(2,364
)
1,830

 
Millions of Dollars
 
Nine Months Ended September 30, 2013
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

86,169

42,535

—

128,704

Equity in earnings of affiliates
3,035

2,735

401

(3,867
)
2,304

Net gain on dispositions
—

49

1

—

50

Other income (loss)
(3
)
36

32

—

65

Intercompany revenues
—

987

16,183

(17,170
)
—

Total Revenues and Other Income
3,032

89,976

59,152

(21,037
)
131,123

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

78,037

50,073

(16,823
)
111,287

Operating expenses
—

2,435

583

(20
)
2,998

Selling, general and administrative expenses
5

713

412

(70
)
1,060

Depreciation and amortization
—

542

170

—

712

Impairments
—

(2
)
28

—

26

Taxes other than income taxes
—

3,828

6,623

(1
)
10,450

Accretion on discounted liabilities
—

14

4

—

18

Interest and debt expense
200

10

253

(256
)
207

Foreign currency transaction (gains) losses
—

1

(17
)
—

(16
)
Total Costs and Expenses
205

85,578

58,129

(17,170
)
126,742

Income before income taxes
2,827

4,398

1,023

(3,867
)
4,381

Provision (benefit) for income taxes
(73
)
1,363

181

—

1,471

Net income
2,900

3,035

842

(3,867
)
2,910

Less: net income attributable to noncontrolling interests
—

—

10

—

10

Net Income Attributable to Phillips 66
$
2,900

3,035

832

(3,867
)
2,900

 
 
 
 
 
 
Comprehensive Income
$
2,847

2,982

754

(3,726
)
2,857


 
Millions of Dollars
 
Nine Months Ended September 30, 2012
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

89,075

46,400

—

135,475

Equity in earnings of affiliates
3,514

2,786

346

(4,138
)
2,508

Net gain (loss) on dispositions
—

190

(1
)
—

189

Other income (loss)
—

(40
)
122

—

82

Intercompany revenues
1

2,047

18,474

(20,522
)
—

Total Revenues and Other Income
3,515

94,058

65,341

(24,660
)
138,254

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

80,833

56,541

(20,459
)
116,915

Operating expenses
—

2,448

555

(43
)
2,960

Selling, general and administrative expenses
3

963

318

(23
)
1,261

Depreciation and amortization
—

490

179

—

669

Impairments
—

45

521

—

566

Taxes other than income taxes
—

3,922

6,384

(1
)
10,305

Accretion on discounted liabilities
—

13

5

—

18

Interest and debt expense
140

24

2

4

170

Foreign currency transaction gains
—

—

(22
)
—

(22
)
Total Costs and Expenses
143

88,738

64,483

(20,522
)
132,842

Income before income taxes
3,372

5,320

858

(4,138
)
5,412

Provision (benefit) for income taxes
(44
)
1,806

229

—

1,991

Net income
3,416

3,514

629

(4,138
)
3,421

Less: net income attributable to noncontrolling interests
—

—

5

—

5

Net Income Attributable to Phillips 66
$
3,416

3,514

624

(4,138
)
3,416

 
 
 
 
 
 
Comprehensive Income
$
3,026

3,632

617

(3,564
)
3,711


 
Millions of Dollars
 
At September 30, 2013
Balance Sheet
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Assets
 
 
 
 
 
Cash and cash equivalents
$
—

1,886

4,056

—

5,942

Accounts and notes receivable
10

3,010

7,353

(629
)
9,744

Inventories
—

2,509

2,228

—

4,737

Prepaid expenses and other current assets
8

291

363

—

662

Total Current Assets
18

7,696

14,000

(629
)
21,085

Investments and long-term receivables
31,764

24,652

7,267

(52,955
)
10,728

Net properties, plants and equipment
—

11,788

3,289

—

15,077

Goodwill
—

3,226

2

—

3,228

Intangibles
—

696

17

—

713

Other assets
40

113

2

(3
)
152

Total Assets
$
31,822

48,171

24,577

(53,587
)
50,983

 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
Accounts payable
$
—

7,369

6,004

(629
)
12,744

Short-term debt
—

18

6

—

24

Accrued income and other taxes
—

273

616

—

889

Employee benefit obligations
—

287

45

—

332

Other accruals
98

256

337

—

691

Total Current Liabilities
98

8,203

7,008

(629
)
14,680

Long-term debt
5,796

156

180

—

6,132

Asset retirement obligations and accrued environmental costs
—

525

162

—

687

Deferred income taxes
—

4,595

1,041

(3
)
5,633

Employee benefit obligations
—

1,060

226

—

1,286

Other liabilities and deferred credits
4,516

2,010

6,162

(12,117
)
571

Total Liabilities
10,410

16,549

14,779

(12,749
)
28,989

Common stock
16,887

25,937

8,447

(34,384
)
16,887

Retained earnings
5,031

6,191

837

(7,029
)
5,030

Accumulated other comprehensive income (loss)
(506
)
(506
)
70

575

(367
)
Noncontrolling interests
—

—

444

—

444

Total Liabilities and Equity
$
31,822

48,171

24,577

(53,587
)
50,983


 
Millions of Dollars
 
At December 31, 2012
Balance Sheet
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Assets
 
 
 
 
 
Cash and cash equivalents
$
—

2,410

1,064

—

3,474

Accounts and notes receivable
47

2,889

8,456

(989
)
10,403

Inventories
—

1,938

1,492

—

3,430

Prepaid expenses and other current assets
11

403

241

—

655

Total Current Assets
58

7,640

11,253

(989
)
17,962

Investments and long-term receivables
28,796

20,798

6,235

(45,358
)
10,471

Net properties, plants and equipment
—

11,714

3,693

—

15,407

Goodwill
—

3,344

—

—

3,344

Intangibles
—

710

14

—

724

Other assets
78

114

9

(36
)
165

Total Assets
$
28,932

44,320

21,204

(46,383
)
48,073

 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
Accounts payable
$
17

7,014

4,668

(989
)
10,710

Short-term debt
—

13

—

—

13

Accrued income and other taxes
—

245

656

—

901

Employee benefit obligations
—

391

50

—

441

Other accruals
50

279

88

—

417

Total Current Liabilities
67

7,942

5,462

(989
)
12,482

Long-term debt
6,795

165

1

—

6,961

Asset retirement obligations and accrued environmental costs
—

563

177

—

740

Deferred income taxes
—

4,478

1,002

(36
)
5,444

Employee benefit obligations
—

1,094

231

—

1,325

Other liabilities and deferred credits
1,434

1,435

5,768

(8,322
)
315

Total Liabilities
8,296

15,677

12,641

(9,347
)
27,267

Common stock
18,376

25,951

8,287

(34,238
)
18,376

Retained earnings
2,713

3,145

87

(3,232
)
2,713

Accumulated other comprehensive income (loss)
(453
)
(453
)
158

434

(314
)
Noncontrolling interests
—

—

31

—

31

Total Liabilities and Equity
$
28,932

44,320

21,204

(46,383
)
48,073



 
Millions of Dollars
 
Nine Months Ended September 30, 2013
Statement of Cash Flows
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Cash Flows From Operating Activities
 
 
 
 
 
Net Cash Provided by Operating Activities
$
3,190

106

1,904

(70
)
5,130

 
 
 
 
 
 
Cash Flows From Investing Activities
 
 
 
 
 
Capital expenditures and investments
—

(683
)
(508
)
21

(1,170
)
Proceeds from asset dispositions
—

62

1,126

—

1,188

Advances/loans—related parties
—

—

(65
)
—

(65
)
Collection of advances/loans—related parties
—

—

100

—

100

Net Cash Provided by (Used in) Investing Activities
—

(621
)
653

21

53

 
 
 
 
 
 
Cash Flows From Financing Activities
 
 
 
 
 
Repayment of debt
(1,000
)
(14
)
(1
)
—

(1,015
)
Issuance of common stock
(4
)
—

—

—

(4
)
Repurchase of common stock
(1,602
)
—

—

—

(1,602
)
Dividends paid on common stock
(575
)
—

(70
)
70

(575
)
Net proceeds from issuance of Phillips 66 Partners LP common units
—

—

404

—

404

Other
(9
)
5

20

(21
)
(5
)
Net Cash Provided by (Used in) Financing Activities
(3,190
)
(9
)
353

49

(2,797
)
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

—

82

—

82

 
 
 
 
 
 
Net Change in Cash and Cash Equivalents
—

(524
)
2,992

—

2,468

Cash and cash equivalents at beginning of period
—

2,410

1,064

—

3,474

Cash and Cash Equivalents at End of Period
$
—

1,886

4,056

—

5,942



 
Millions of Dollars
 
Nine Months Ended September 30, 2012
Statement of Cash Flows
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Cash Flows From Operating Activities
 
 
 
 
 
Net Cash Provided by (Used in) Operating Activities
$
(44
)
7,300

(4,265
)
—

2,991

 
 
 
 
 
 
Cash Flows From Investing Activities
 
 
 
 
 
Capital expenditures and investments
—

(606
)
(231
)
10

(827
)
Proceeds from asset dispositions
—

210

49

—

259

Advances/loans—related parties
—

—

(100
)
—

(100
)
Collection of advances/loans—related parties
—

—

7

(7
)
—

Net Cash Used in Investing Activities
—

(396
)
(275
)
3

(668
)
 
 
 
 
 
 
Cash Flows From Financing Activities
 
 
 
 
 
Contributions from (distributions to) ConocoPhillips
(7,469
)
(3,837
)
6,051

—

(5,255
)
Issuance of debt
7,794

—

—

—

7,794

Repayment of debt
—

(204
)
(9
)
7

(206
)
Issuance of common stock
23

—

—

—

23

Repurchase of common stock
(111
)
—

—

—

(111
)
Dividends paid on common stock
(125
)
—

—

—

(125
)
Other
(68
)
28

10

(10
)
(40
)
Net Cash Provided by (Used in) Financing Activities
44

(4,013
)
6,052

(3
)
2,080

 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

—

27

—

27

 
 
 
 
 
 
Net Change in Cash and Cash Equivalents
—

2,891

1,539

—

4,430

Cash and cash equivalents at beginning of period
—

—

—

—

—

Cash and Cash Equivalents at End of Period
$
—

2,891

1,539

—

4,430

Separation and Basis of Presentation (Policies)
Basis of Presentation 
Basis of Presentation
Prior to the Separation, our results of operations, financial position and cash flows consisted of ConocoPhillips' refining, marketing and transportation operations; its natural gas gathering, processing, transmission and marketing operations, primarily conducted through its equity investment in DCP Midstream, LLC (DCP Midstream); its petrochemical operations, conducted through its equity investment in Chevron Phillips Chemical Company LLC (CPChem); its power generation operations; and an allocable portion of its corporate costs (together, the “downstream businesses”). These financial statements have been presented as if the downstream businesses had been combined for all periods presented prior to the Separation. All intercompany transactions and accounts within the downstream businesses were eliminated. The statement of income for the period prior to the Separation includes expense allocations for certain corporate functions historically performed by ConocoPhillips and not allocated to its operating segments, including allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, procurement and information technology. These allocations were based primarily on specific identification of time and/or activities associated with the downstream businesses, employee headcount or capital expenditures, and our management believes the assumptions underlying the allocations were reasonable. The combined financial statements may not necessarily reflect all of the actual expenses that would have been incurred had we been a stand-alone company during the period presented prior to the Separation. All financial information presented after the Separation represents the consolidated results of operations, financial position and cash flows of Phillips 66. Accordingly:

•
Our consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2013, consist entirely of the consolidated results of Phillips 66. Our consolidated statements of income and comprehensive income for the three months ended September 30, 2012, consist entirely of the consolidated results of Phillips 66. Our consolidated statements of income and comprehensive income for the nine months ended September 30, 2012, consist of the consolidated results of Phillips 66 for the five months ended September 30, 2012, and of the combined results of the downstream businesses for the four months ended April 30, 2012.

•
Our consolidated balance sheet at September 30, 2013, and December 31, 2012, consists of the consolidated balances of Phillips 66.

•
Our consolidated statement of cash flows for the nine months ended September 30, 2013, consists entirely of the consolidated results of Phillips 66. Our consolidated statement of cash flows for the nine months ended September 30, 2012, consists of the consolidated results of Phillips 66 for the five months ended September 30, 2012, and the combined results of the downstream businesses for the four months ended April 30, 2012.

•
Our consolidated statement of changes in equity for the nine months ended September 30, 2013, consists entirely of the consolidated results of Phillips 66. Our consolidated statement of changes in equity for the nine months ended September 30, 2012, consists of both the combined activity for the downstream businesses prior to April 30, 2012, and the consolidated activity for Phillips 66 completed at and subsequent to the Separation on April 30, 2012.

Effective January 1, 2013, we changed the organizational structure of the internal financial information reviewed by our chief executive officer, and determined this resulted in a change in the composition of our operating segments. The primary effects of this reporting reorganization were:

•
We disaggregated the former Refining and Marketing (R&M) segment into two separate operating segments titled "Refining" and "Marketing and Specialties."

•
We moved our Transportation and power businesses from the former R&M segment to the Midstream and Marketing and Specialties (M&S) segments, respectively.

The new segment alignment is presented for the three- and nine-month periods ended September 30, 2013, with the prior periods recast for comparability.
Goodwill 
Effective January 1, 2013, we realigned our operating segments and determined that goodwill (which, prior to the realignment, had been assigned 100 percent to our former R&M segment) should now be assigned to three of the realigned operating segments—Midstream, Refining and M&S. We further determined that, for the Midstream segment, Transportation constituted a reporting unit. For the Refining and M&S segments, we determined the goodwill reporting unit was at the operating segment level, due to the economic similarities of the components of those segments.
Earnings Per Share 
The numerator of basic earnings per share (EPS) is net income attributable to Phillips 66, reduced by noncancelable dividends paid on unvested share-based employee awards during the vesting period (participating securities). The denominator of basic EPS is the sum of the daily weighted-average number of common shares outstanding during the periods presented and fully vested stock and unit awards that have not yet been issued as common stock. The numerator of diluted EPS is also based on net income attributable to Phillips 66, which is reduced only by dividend equivalents paid on participating securities for which the dividends are more dilutive than the participation of the awards in the earnings of the periods presented. To the extent unvested stock, unit or option awards and vested unexercised stock options are dilutive, they are included with the weighted-average common shares outstanding in the denominator. Treasury stock is excluded from the denominator in both basic and diluted EPS.

Commitments and Contingencies 
In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we record receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain.

Inventories (Tables)
Summary of Inventories
Inventories consisted of the following:

 
Millions of Dollars
 
September 30
2013

 
December 31
2012

 
 
 
 
Crude oil and petroleum products
$
4,470

 
3,138

Materials and supplies
267

 
292

 
$
4,737

 
3,430

Investments, Loans and Long-Term Receivables (Tables)
Summary of Financial Information
Summarized 100 percent financial information for WRB Refining LP and CPChem was as follows:
 
 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

 
 
 
 
 
 
 
 
Revenues
$
8,742

 
8,347

 
24,954

 
25,409

Income before income taxes
821

 
1,498

 
3,587

 
4,074

Net income
801

 
1,449

 
3,526

 
3,982

Properties, Plants and Equipment (Tables)
Properties, Plants and Equipment with Associated Accumulated Depreciation and Amortization
Our investment in PP&E, with the associated accumulated depreciation and amortization (Accum. D&A), was:

 
Millions of Dollars
 
September 30, 2013
 
December 31, 2012
 
Gross
PP&E

 
Accum.
D&A

 
Net
PP&E

 
Gross
PP&E

 
Accum.
D&A

 
Net
PP&E

 
 
 
 
 
 
 
 
 
 
 
 
Midstream
$
2,642

 
1,081

 
1,561

 
2,460

 
1,016

 
1,444

Chemicals
—

 
—

 
—

 
—

 
—

 
—

Refining
18,894

 
6,557

 
12,337

 
17,989

 
5,913

 
12,076

Marketing and Specialties
1,425

 
738

 
687

 
2,500

 
1,078

 
1,422

Corporate and Other
930

 
438

 
492

 
880

 
415

 
465

 
$
23,891

 
8,814

 
15,077

 
23,829

 
8,422

 
15,407

Goodwill (Tables)
Carrying amount of goodwill
The carrying amount of goodwill was as follows:

 
Millions of Dollars
 
September 30
2013

 
December 31
2012

 
 
 
 
Midstream
$
518

 
518

Refining
1,933

 
1,934

Marketing and Specialties
777

 
892

 
$
3,228

 
3,344

Impairments (Tables)
Impairment Charges
The three- and nine-month periods ended September 30, 2013 and 2012, included the following before-tax impairment charges:

 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012


 
 
 
 
 
 
 
Midstream
$
—

 
248

 
—

 
524

Refining
1

 
—

 
2

 
42

Marketing and Specialties
—

 
—

 
15

 
—

Corporate and Other
—

 
—

 
9

 
—

 
$
1

 
248

 
26

 
566

Earnings per Share (Tables)
Reconciliation of Basic and Diluted Earnings Per Share
On April 30, 2012, 625.3 million shares of our common stock were distributed to ConocoPhillips stockholders in conjunction with the Separation. For comparative purposes, and to provide a more meaningful calculation of weighted-average shares outstanding, we have assumed this amount to be outstanding as of the beginning of each period prior to the Separation presented in the calculation of weighted-average shares. In addition, we have assumed the fully vested stock and unit awards outstanding at April 30, 2012, were also outstanding for each of the periods presented prior to the Separation; and we have assumed the dilutive securities outstanding at April 30, 2012, were also outstanding for each period prior to the Separation.

 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

Basic EPS Calculation
 
 
 
 
 
 
 
Allocation of earnings (millions):
 
 
 
 
 
 
 
Net income attributable to Phillips 66
$
535

 
1,599

 
2,900

 
3,416

Income allocated to participating securities
(2
)
 
(1
)
 
(4
)
 
(1
)
Income available to common stockholders
$
533

 
1,598

 
2,896

 
3,415

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (thousands):
Basic
608,934

 
630,672

 
617,654

 
628,940

 
 
 
 
 
 
 
 
Basic EPS (dollars)
$
0.88

 
2.53

 
4.69

 
5.43

 
 
 
 
 
 
 
 
Diluted EPS Calculation
 
 
 
 
 
 
 
Allocation of earnings (millions):
 
 
 
 
 
 
 
Net income attributable to Phillips 66
$
535

 
1,599

 
2,900

 
3,416

Income allocated to participating securities
—

 
—

 
—

 
—

Income available to common stockholders
$
535

 
1,599

 
2,900

 
3,416

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (thousands):
Basic
608,934

 
630,672

 
617,654

 
628,940

Dilutive effect of stock-based compensation
5,585

 
7,241

 
6,192

 
7,645

Weighted-average diluted common shares outstanding
614,519

 
637,913

 
623,846

 
636,585

 
 
 
 
 
 
 
 
Diluted EPS (dollars)
$
0.87

 
2.51

 
4.65

 
5.37

Derivatives and Financial Instruments (Tables)
Summary of Fair Value of Commodity Derivative Assets and Liabilities and Gains (Losses) from Derivative Contracts 
The following table indicates the balance sheet line items that include the fair values of commodity derivative assets and liabilities presented net (i.e., commodity derivative assets and liabilities with the same counterparty are netted where the right of setoff exists); however, the balances in the following table are presented gross. For information on the impact of counterparty netting and collateral netting, see Note 15—Fair Value Measurements.
 
 
Millions of Dollars
 
September 30
2013

 
December 31
2012

Assets
 
 
 
Prepaid expenses and other current assets
$
1,026

 
767

Other assets
11

 
3

Liabilities
 
 
 
Other accruals
1,038

 
766

Other liabilities and deferred credits
8

 
3

Hedge accounting has not been used for any items in the table.


The gains (losses) from commodity derivatives incurred, and the line items where they appear on our consolidated statement of income, were:
 
 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

 
 
 
 
 
 
 
 
Sales and other operating revenues
$
(44
)
 
(232
)
 
74

 
(48
)
Equity in earnings of affiliates
(12
)
 
5

 
(13
)
 
5

Other income (loss)
(24
)
 
(9
)
 
3

 
44

Purchased crude oil and products
(78
)
 
(86
)
 
85

 
7

Hedge accounting has not been used for any item in the table.
Summary of Material Net Exposures and Notional Amount of Derivative Contracts 
 
Open Position
Long/(Short)
 
September 30
2013

 
December 31
2012

Commodity
 
 
 
Crude oil, refined products and NGL (millions of barrels)
(25
)
 
(8
)
Fair Value Measurements (Tables)
Fair Value Hierarchy for Material Financial Instruments and Derivative Assets and Liabilities, Including the Effect of Counterparty Netting 
The carrying values and fair values by hierarchy of our material financial instruments, either carried or disclosed at fair value, and derivative assets and liabilities, including any effects of master netting agreements or collateral, were:

 
Millions of Dollars
 
September 30, 2013
 
Fair Value Hierarchy
 
Total Fair Value of Gross Assets & Liabilities

Effect of Counterparty Netting

Effect of Collateral Netting

Difference in Carrying Value and Fair Value

Net Carrying Value Presented on the Balance Sheet

Cash Collateral Received or Paid, Not Offset on Balance Sheet

 
Level 1

 
Level 2

 
Level 3

Commodity Derivative Assets
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
692

 
268

 
—

 
960

(931
)
(1
)
—

28

—

OTC instruments
—

 
25

 
—

 
25

(11
)
—

—

14

—

Physical forward contracts*
—

 
47

 
5

 
52

(1
)
—

—

51

—

Rabbi trust assets
61

 
—

 
—

 
61

N/A

N/A

—

61

N/A

 
$
753

 
340

 
5

 
1,098

(943
)
(1
)
—

154

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
705

 
249

 
—

 
954

(931
)
(23
)
—

—

—

OTC instruments
—

 
39

 
—

 
39

(11
)
—

—

28

—

Physical forward contracts*
—

 
52

 
1

 
53

(1
)
—

—

52

—

Floating-rate debt
50

 
—

 
—

 
50

N/A

N/A

—

50

N/A

Fixed-rate debt, excluding capital leases**
—

 
6,102

 
—

 
6,102

N/A

N/A

(193
)
5,909

N/A

 
$
755

 
6,442

 
1

 
7,198

(943
)
(23
)
(193
)
6,039


*Physical forward contracts may have a larger value on the balance sheet than disclosed in the fair value hierarchy when the remaining contract term at the reporting date is greater than 12 months and the short-term portion is an asset while the long-term portion is a liability, or vice versa.
**We carry fixed-rate debt on the balance sheet at amortized cost.


 
Millions of Dollars
 
December 31, 2012
 
Fair Value Hierarchy
 
Total Fair Value of Gross Assets & Liabilities

Effect of Counterparty Netting

Effect of Collateral Netting

Difference in Carrying Value and Fair Value

Net Carrying Value Presented on the Balance Sheet

Cash Collateral Received or Paid, Not Offset on Balance Sheet

 
Level 1

 
Level 2

 
Level 3

 
Commodity Derivative Assets
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
380

 
309

 
—

 
689

(672
)
(8
)
—

9

—

OTC instruments
—

 
15

 
—

 
15

(7
)
—

—

8

—

Physical forward contracts*
—

 
61

 
2

 
63

4

—

—

67

—

Rabbi trust assets
50

 
—

 
—

 
50

N/A

N/A

—

50

N/A

 
$
430

 
385

 
2

 
817

(675
)
(8
)
—

134



 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Exchange-cleared instruments
$
393

 
328

 
—

 
721

(672
)
(42
)
—

7

(7
)
OTC instruments
—

 
13

 
—

 
13

(7
)
—

—

6

—

Physical forward contracts*
—

 
31

 
1

 
32

4

—

—

36

—

Floating-rate debt
1,050

 
—

 
—

 
1,050

N/A

N/A

—

1,050

N/A

Fixed-rate debt, excluding capital leases**
—

 
6,508

 
—

 
6,508

N/A

N/A

(590
)
5,918

N/A

 
$
1,443

 
6,880

 
1

 
8,324

(675
)
(42
)
(590
)
7,017


*Physical forward contracts may have a larger value on the balance sheet than disclosed in the fair value hierarchy when the remaining contract term at the reporting date is greater than 12 months and the short-term portion is an asset while the long-term portion is a liability, or vice versa.
**We carry fixed-rate debt on the balance sheet at amortized cost.

Value of Assets by Major Category, Measured at Fair Value on Nonrecurring Basis 
The following table shows the values of assets, by major category, measured at fair value on a nonrecurring basis in periods subsequent to their initial recognition during the nine-month periods ended September 30, 2013 and 2012:

 
Millions of Dollars
 
 
 
Fair Value
Measurements Using
 
 
 
Fair Value*

 
Level 1
Inputs

 
Level 2
Inputs

 
Level 3
Inputs

 
Before-
Tax Loss

September 30, 2013
 
 
 
 
 
 
 
 
 
Net properties, plants and equipment (held for use)
$
22

 
22

 
—

 
—

 
27

 
 
 
 
 
 
 
 
 
 
September 30, 2012
 
 
 
 
 
 
 
 
 
Net properties, plants and equipment (held for use)
$
33

 
33

 
—

 
—

 
43

Net properties, plants and equipment (held for sale)
32

 
32

 
—

 
—

 
42

Equity method investment
283

 
—

 
—

 
283

 
480

*Represents the fair value at the time of the impairment
Employee Benefit Plans (Tables)
Components of Net Periodic Benefit Cost
The allocated benefit cost from Shared Plans, as well as the components of net periodic benefit cost associated with plans sponsored by us for the three and nine months ended September 30, 2013 and 2012, are shown in the table below:
 
 
Millions of Dollars
 
Pension Benefits
 
Other Benefits
 
2013
 
2012
 
2013

 
2012

 
U.S.

 
Int’l.

 
U.S.

 
Int’l.

 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
31

 
9

 
30

 
7

 
2

 
1

Interest cost
23

 
7

 
25

 
8

 
2

 
2

Expected return on plan assets
(30
)
 
(7
)
 
(30
)
 
(7
)
 
—

 
—

Amortization of prior service cost
1

 
—

 
—

 
—

 
—

 
—

Recognized net actuarial loss (gain)
21

 
4

 
19

 
2

 
—

 
(1
)
Subtotal net periodic benefit cost
46

 
13

 
44

 
10

 
4

 
2

Allocated benefit cost from ConocoPhillips
—

 
—

 
—

 
—

 
—

 
—

Total net periodic benefit cost
$
46

 
13

 
44

 
10

 
4

 
2

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
93

 
27

 
51

 
14

 
6

 
2

Interest cost
69

 
23

 
41

 
17

 
5

 
3

Expected return on plan assets
(90
)
 
(22
)
 
(50
)
 
(14
)
 
—

 
—

Amortization of prior service cost (credit)
2

 
(1
)
 
1

 
—

 
(1
)
 
—

Recognized net actuarial loss (gain)
63

 
12

 
31

 
5

 
—

 
(1
)
Subtotal net periodic benefit cost
137

 
39

 
74

 
22

 
10

 
4

Allocated benefit cost from ConocoPhillips
—

 
—

 
71

 
13

 
—

 
7

Total net periodic benefit cost
$
137

 
39

 
145

 
35

 
10

 
11

Accumulated Other Comprehensive Income (Loss) (Tables)
Summary of Changes in and Reclassifications Out of Accumulated Other Comprehensive Income (Loss) by Component
The following table depicts changes in accumulated other comprehensive loss by component, as well as detail on reclassifications out of accumulated other comprehensive loss:
 
 
Millions of Dollars
 
Defined Benefit Plans

 
Foreign Currency Translation

 
Hedging

 
Accumulated Other Comprehensive Loss

 
 
 
 
 
 
 
 
December 31, 2012
$
(778
)
 
466

 
(2
)
 
(314
)
Other comprehensive income (loss) before reclassifications
(1
)
 
(99
)
 
1

 
(99
)
Amounts reclassified from accumulated other comprehensive income (loss)*
 
 
 
 
 
 


Amortization of defined benefit plan items**
 
 
 
 
 
 
 
Actuarial losses
46

 
—

 
—

 
46

Net current period other comprehensive income (loss)
45

 
(99
)
 
1

 
(53
)
September 30, 2013
$
(733
)
 
367

 
(1
)
 
(367
)
*There were no significant reclassifications related to foreign currency translation or hedging.
**These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost (see Note 17—Employee Benefit Plans, for additional information).
Cash Flow Information (Tables)
Cash Flow Information
 
Millions of Dollars
 
Nine Months Ended
 
September 30
 
2013

 
2012

Noncash Investing and Financing Activities
 
 
 
Increase in net PP&E and debt related to capital lease obligation
$
177

 
—

Transfer of net PP&E in accordance with the Separation and Distribution Agreement with ConocoPhillips
—

 
374

Transfer of employee benefit obligations in accordance with the Separation and Distribution Agreement with ConocoPhillips
—

 
1,234

Increase in deferred tax assets associated with the employee benefit liabilities transferred in accordance with the Separation and Distribution Agreement with ConocoPhillips
—

 
461

 
 
 
 
Cash Payments
 
 
 
Interest
$
146

 
28

Income taxes*
1,001

 
927

*Excludes our share of cash tax payments made directly by ConocoPhillips prior to the Separation.
Related Party Transactions (Tables)
Significant Transactions with Related Parties
Significant transactions with related parties were:

 
Millions of Dollars
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2013

 
2012

 
2013

 
2012

 
 
 
 
 
 
 
 
Operating revenues and other income (a)
$
2,064

 
1,883

 
5,866

 
6,119

Purchases (b)
4,998

 
4,176

 
13,762

 
18,984

Operating expenses and selling, general and administrative expenses (c)
28

 
32

 
80

 
175

Interest expense (d)
2

 
2

 
6

 
6


(a)
We sold crude oil to MRC. NGL and other petrochemical feedstocks, along with solvents, were sold to CPChem, and gas oil and hydrogen feedstocks were sold to Excel. Certain feedstocks and intermediate products were sold to WRB. We also acted as agent for WRB in supplying other crude oil and feedstocks, wherein the transactional amounts did not impact operating revenues. In addition, we charged several of our affiliates, including CPChem and MSLP, for the use of common facilities, such as steam generators, waste and water treaters, and warehouse facilities.

(b)
We purchased refined products from WRB. We also acted as agent for WRB in distributing asphalt and solvents, wherein the transactional amounts did not impact purchases. We purchased natural gas and NGL from DCP Midstream and CPChem for use in our refinery processes and other feedstocks from various affiliates. We purchased refined products from MRC. We also paid fees to various pipeline equity companies for transporting finished refined products. In addition, we paid a price upgrade to MSLP for heavy crude processing. We purchased base oils and fuel products from Excel for use in our refining and specialty businesses.

(c)
We paid utility and processing fees to various affiliates.

(d)
We incurred interest expense on a note payable to MSLP. See Note 6—Investments, Loans and Long-Term Receivables, for additional information on loans to affiliated companies.
Condensed Consolidating Financial Information (Tables)
Condensed Income Statement 
 
Millions of Dollars
 
Three Months Ended September 30, 2013
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

29,196

15,005

—

44,201

Equity in earnings of affiliates
579

786

166

(884
)
647

Net gain on dispositions
—

8

—

—

8

Other income (loss)
(1
)
(13
)
7

—

(7
)
Intercompany revenues
—

258

5,482

(5,740
)
—

Total Revenues and Other Income
578

30,235

20,660

(6,624
)
44,849

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

26,864

17,506

(5,624
)
38,746

Operating expenses
—

815

178

(6
)
987

Selling, general and administrative expenses
1

244

133

(24
)
354

Depreciation and amortization
—

182

54

—

236

Impairments
—

1

—

—

1

Taxes other than income taxes
—

1,324

2,301

(1
)
3,624

Accretion on discounted liabilities
—

4

2

—

6

Interest and debt expense
66

4

83

(85
)
68

Foreign currency transaction losses
—

1

—

—

1

Total Costs and Expenses
67

29,439

20,257

(5,740
)
44,023

Income before income taxes
511

796

403

(884
)
826

Provision (benefit) for income taxes
(24
)
217

93

—

286

Net income
535

579

310

(884
)
540

Less: net income attributable to noncontrolling interests
—

—

5

—

5

Net Income Attributable to Phillips 66
$
535

579

305

(884
)
535

 
 
 
 
 
 
Comprehensive Income
$
734

777

495

(1,267
)
739


 
Millions of Dollars
 
Three Months Ended September 30, 2012
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

28,495

14,450

—

42,945

Equity in earnings of affiliates
1,652

1,071

161

(1,925
)
959

Net loss on dispositions
—

(1
)
—

—

(1
)
Other income (loss)
—

6

(2
)
—

4

Intercompany revenues
1

551

6,192

(6,744
)
—

Total Revenues and Other Income
1,653

30,122

20,801

(8,669
)
43,907

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

25,037

17,859

(6,707
)
36,189

Operating expenses
—

725

171

(12
)
884

Selling, general and administrative expenses
2

333

119

(22
)
432

Depreciation and amortization
—

170

59

—

229

Impairments
—

44

204

—

248

Taxes other than income taxes
—

1,302

2,109

(1
)
3,410

Accretion on discounted liabilities
—

6

1

—

7

Interest and debt expense
71

4

1

(2
)
74

Foreign currency transaction gains
—

—

(15
)
—

(15
)
Total Costs and Expenses
73

27,621

20,508

(6,744
)
41,458

Income before income taxes
1,580

2,501

293

(1,925
)
2,449

Provision (benefit) for income taxes
(19
)
849

18

—

848

Net income
1,599

1,652

275

(1,925
)
1,601

Less: net income attributable to noncontrolling interests
—

—

2

—

2

Net Income Attributable to Phillips 66
$
1,599

1,652

273

(1,925
)
1,599

 
 
 
 
 
 
Comprehensive Income
$
1,827

1,880

487

(2,364
)
1,830

 
Millions of Dollars
 
Nine Months Ended September 30, 2013
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

86,169

42,535

—

128,704

Equity in earnings of affiliates
3,035

2,735

401

(3,867
)
2,304

Net gain on dispositions
—

49

1

—

50

Other income (loss)
(3
)
36

32

—

65

Intercompany revenues
—

987

16,183

(17,170
)
—

Total Revenues and Other Income
3,032

89,976

59,152

(21,037
)
131,123

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

78,037

50,073

(16,823
)
111,287

Operating expenses
—

2,435

583

(20
)
2,998

Selling, general and administrative expenses
5

713

412

(70
)
1,060

Depreciation and amortization
—

542

170

—

712

Impairments
—

(2
)
28

—

26

Taxes other than income taxes
—

3,828

6,623

(1
)
10,450

Accretion on discounted liabilities
—

14

4

—

18

Interest and debt expense
200

10

253

(256
)
207

Foreign currency transaction (gains) losses
—

1

(17
)
—

(16
)
Total Costs and Expenses
205

85,578

58,129

(17,170
)
126,742

Income before income taxes
2,827

4,398

1,023

(3,867
)
4,381

Provision (benefit) for income taxes
(73
)
1,363

181

—

1,471

Net income
2,900

3,035

842

(3,867
)
2,910

Less: net income attributable to noncontrolling interests
—

—

10

—

10

Net Income Attributable to Phillips 66
$
2,900

3,035

832

(3,867
)
2,900

 
 
 
 
 
 
Comprehensive Income
$
2,847

2,982

754

(3,726
)
2,857


 
Millions of Dollars
 
Nine Months Ended September 30, 2012
Statement of Income
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Revenues and Other Income
 
 
 
 
 
Sales and other operating revenues
$
—

89,075

46,400

—

135,475

Equity in earnings of affiliates
3,514

2,786

346

(4,138
)
2,508

Net gain (loss) on dispositions
—

190

(1
)
—

189

Other income (loss)
—

(40
)
122

—

82

Intercompany revenues
1

2,047

18,474

(20,522
)
—

Total Revenues and Other Income
3,515

94,058

65,341

(24,660
)
138,254

 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
Purchased crude oil and products
—

80,833

56,541

(20,459
)
116,915

Operating expenses
—

2,448

555

(43
)
2,960

Selling, general and administrative expenses
3

963

318

(23
)
1,261

Depreciation and amortization
—

490

179

—

669

Impairments
—

45

521

—

566

Taxes other than income taxes
—

3,922

6,384

(1
)
10,305

Accretion on discounted liabilities
—

13

5

—

18

Interest and debt expense
140

24

2

4

170

Foreign currency transaction gains
—

—

(22
)
—

(22
)
Total Costs and Expenses
143

88,738

64,483

(20,522
)
132,842

Income before income taxes
3,372

5,320

858

(4,138
)
5,412

Provision (benefit) for income taxes
(44
)
1,806

229

—

1,991

Net income
3,416

3,514

629

(4,138
)
3,421

Less: net income attributable to noncontrolling interests
—

—

5

—

5

Net Income Attributable to Phillips 66
$
3,416

3,514

624

(4,138
)
3,416

 
 
 
 
 
 
Comprehensive Income
$
3,026

3,632

617

(3,564
)
3,711

Condensed Balance Sheet 
 
Millions of Dollars
 
At September 30, 2013
Balance Sheet
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Assets
 
 
 
 
 
Cash and cash equivalents
$
—

1,886

4,056

—

5,942

Accounts and notes receivable
10

3,010

7,353

(629
)
9,744

Inventories
—

2,509

2,228

—

4,737

Prepaid expenses and other current assets
8

291

363

—

662

Total Current Assets
18

7,696

14,000

(629
)
21,085

Investments and long-term receivables
31,764

24,652

7,267

(52,955
)
10,728

Net properties, plants and equipment
—

11,788

3,289

—

15,077

Goodwill
—

3,226

2

—

3,228

Intangibles
—

696

17

—

713

Other assets
40

113

2

(3
)
152

Total Assets
$
31,822

48,171

24,577

(53,587
)
50,983

 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
Accounts payable
$
—

7,369

6,004

(629
)
12,744

Short-term debt
—

18

6

—

24

Accrued income and other taxes
—

273

616

—

889

Employee benefit obligations
—

287

45

—

332

Other accruals
98

256

337

—

691

Total Current Liabilities
98

8,203

7,008

(629
)
14,680

Long-term debt
5,796

156

180

—

6,132

Asset retirement obligations and accrued environmental costs
—

525

162

—

687

Deferred income taxes
—

4,595

1,041

(3
)
5,633

Employee benefit obligations
—

1,060

226

—

1,286

Other liabilities and deferred credits
4,516

2,010

6,162

(12,117
)
571

Total Liabilities
10,410

16,549

14,779

(12,749
)
28,989

Common stock
16,887

25,937

8,447

(34,384
)
16,887

Retained earnings
5,031

6,191

837

(7,029
)
5,030

Accumulated other comprehensive income (loss)
(506
)
(506
)
70

575

(367
)
Noncontrolling interests
—

—

444

—

444

Total Liabilities and Equity
$
31,822

48,171

24,577

(53,587
)
50,983


 
Millions of Dollars
 
At December 31, 2012
Balance Sheet
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Assets
 
 
 
 
 
Cash and cash equivalents
$
—

2,410

1,064

—

3,474

Accounts and notes receivable
47

2,889

8,456

(989
)
10,403

Inventories
—

1,938

1,492

—

3,430

Prepaid expenses and other current assets
11

403

241

—

655

Total Current Assets
58

7,640

11,253

(989
)
17,962

Investments and long-term receivables
28,796

20,798

6,235

(45,358
)
10,471

Net properties, plants and equipment
—

11,714

3,693

—

15,407

Goodwill
—

3,344

—

—

3,344

Intangibles
—

710

14

—

724

Other assets
78

114

9

(36
)
165

Total Assets
$
28,932

44,320

21,204

(46,383
)
48,073

 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
Accounts payable
$
17

7,014

4,668

(989
)
10,710

Short-term debt
—

13

—

—

13

Accrued income and other taxes
—

245

656

—

901

Employee benefit obligations
—

391

50

—

441

Other accruals
50

279

88

—

417

Total Current Liabilities
67

7,942

5,462

(989
)
12,482

Long-term debt
6,795

165

1

—

6,961

Asset retirement obligations and accrued environmental costs
—

563

177

—

740

Deferred income taxes
—

4,478

1,002

(36
)
5,444

Employee benefit obligations
—

1,094

231

—

1,325

Other liabilities and deferred credits
1,434

1,435

5,768

(8,322
)
315

Total Liabilities
8,296

15,677

12,641

(9,347
)
27,267

Common stock
18,376

25,951

8,287

(34,238
)
18,376

Retained earnings
2,713

3,145

87

(3,232
)
2,713

Accumulated other comprehensive income (loss)
(453
)
(453
)
158

434

(314
)
Noncontrolling interests
—

—

31

—

31

Total Liabilities and Equity
$
28,932

44,320

21,204

(46,383
)
48,073

Condensed Statement of Cash Flows 
 
Millions of Dollars
 
Nine Months Ended September 30, 2013
Statement of Cash Flows
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Cash Flows From Operating Activities
 
 
 
 
 
Net Cash Provided by Operating Activities
$
3,190

106

1,904

(70
)
5,130

 
 
 
 
 
 
Cash Flows From Investing Activities
 
 
 
 
 
Capital expenditures and investments
—

(683
)
(508
)
21

(1,170
)
Proceeds from asset dispositions
—

62

1,126

—

1,188

Advances/loans—related parties
—

—

(65
)
—

(65
)
Collection of advances/loans—related parties
—

—

100

—

100

Net Cash Provided by (Used in) Investing Activities
—

(621
)
653

21

53

 
 
 
 
 
 
Cash Flows From Financing Activities
 
 
 
 
 
Repayment of debt
(1,000
)
(14
)
(1
)
—

(1,015
)
Issuance of common stock
(4
)
—

—

—

(4
)
Repurchase of common stock
(1,602
)
—

—

—

(1,602
)
Dividends paid on common stock
(575
)
—

(70
)
70

(575
)
Net proceeds from issuance of Phillips 66 Partners LP common units
—

—

404

—

404

Other
(9
)
5

20

(21
)
(5
)
Net Cash Provided by (Used in) Financing Activities
(3,190
)
(9
)
353

49

(2,797
)
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

—

82

—

82

 
 
 
 
 
 
Net Change in Cash and Cash Equivalents
—

(524
)
2,992

—

2,468

Cash and cash equivalents at beginning of period
—

2,410

1,064

—

3,474

Cash and Cash Equivalents at End of Period
$
—

1,886

4,056

—

5,942



 
Millions of Dollars
 
Nine Months Ended September 30, 2012
Statement of Cash Flows
Phillips 66

Phillips 66 Company

All Other Subsidiaries

Consolidating Adjustments

Total Consolidated

Cash Flows From Operating Activities
 
 
 
 
 
Net Cash Provided by (Used in) Operating Activities
$
(44
)
7,300

(4,265
)
—

2,991

 
 
 
 
 
 
Cash Flows From Investing Activities
 
 
 
 
 
Capital expenditures and investments
—

(606
)
(231
)
10

(827
)
Proceeds from asset dispositions
—

210

49

—

259

Advances/loans—related parties
—

—

(100
)
—

(100
)
Collection of advances/loans—related parties
—

—

7

(7
)
—

Net Cash Used in Investing Activities
—

(396
)
(275
)
3

(668
)
 
 
 
 
 
 
Cash Flows From Financing Activities
 
 
 
 
 
Contributions from (distributions to) ConocoPhillips
(7,469
)
(3,837
)
6,051

—

(5,255
)
Issuance of debt
7,794

—

—

—

7,794

Repayment of debt
—

(204
)
(9
)
7

(206
)
Issuance of common stock
23

—

—

—

23

Repurchase of common stock
(111
)
—

—

—

(111
)
Dividends paid on common stock
(125
)
—

—

—

(125
)
Other
(68
)
28

10

(10
)
(40
)
Net Cash Provided by (Used in) Financing Activities
44

(4,013
)
6,052

(3
)
2,080

 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

—

27

—

27

 
 
 
 
 
 
Net Change in Cash and Cash Equivalents
—

2,891

1,539

—

4,430

Cash and cash equivalents at beginning of period
—

—

—

—

—

Cash and Cash Equivalents at End of Period
$
—

2,891

1,539

—

4,430

Separation and Basis of Presentation (Narrative) (Details)
0 Months Ended 1 Months Ended
Jan. 2, 2013
segment
Apr. 30, 2012
company
Apr. 30, 2012
company
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
Number of companies that were separated
 
2 
2 
Shares of Phillips 66 common stock distributed on date of Separation, shares
 
 
625,272,302 
Number of shares of Phillips 66 stock received for every share of ConocoPhillips stock held, ratio
 
1 
 
Number of shares of ConocoPhillips stock held for every share of Phillips 66 stock received, ratio
 
2 
 
Ownership interest in Phillips 66 retained by ConocoPhillips following the Separation, percentage
 
0.00% 
0.00% 
Number of operating segments dissagregated from our former R&M segment
2 
 
 
Variable Interest Entities (VIEs) (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 9 Months Ended
Sep. 30, 2013
Merey Sweeny [Member]
Aug. 31, 2009
Merey Sweeny [Member]
Aug. 28, 2009
Merey Sweeny [Member]
Sep. 30, 2013
Merey Sweeny [Member]
Guarantees of Joint Venture Debt [Member]
Apr. 30, 2012
Merey Sweeny [Member]
Guarantees of Joint Venture Debt [Member]
Sep. 30, 2013
Excel Paralubes [Member]
Sep. 30, 2013
Excel Paralubes [Member]
Guarantees of Joint Venture Debt [Member]
Apr. 30, 2012
Excel Paralubes [Member]
Guarantees of Joint Venture Debt [Member]
Aug. 27, 2009
Conocophillips [Member]
Apr. 30, 2012
Conocophillips [Member]
Excel Paralubes [Member]
Guarantees of Joint Venture Debt [Member]
Oct. 23, 2013
Subsequent Event [Member]
Variable interest entities VIEs (Textual) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Additional ownership interest acquired in MSLP that is in dispute
 
50.00% 
50.00% 
 
 
 
 
 
 
 
 
Debt guarantee to lender of 8.85% senior notes issued by MSLP, percentage
 
 
 
100.00% 
 
 
 
 
 
 
 
Stated interest rate of debt issued by VIE, percentage
 
 
 
8.85% 
8.85% 
 
 
7.43% 
 
 
 
Maximum exposure under debt guarantee
 
 
 
$ 224 
 
 
$ 70 
 
 
 
 
Book value of investment in VIE
78 
 
 
 
 
135 
 
 
 
 
 
Percentage of ownership interest in Excel
 
 
 
 
 
50.00% 
 
 
50.00% 
 
 
Percentage of governance interest in Excel
 
 
 
 
 
50.00% 
 
 
 
 
 
Percentage of guarantee
 
 
 
 
100.00% 
50.00% 
 
 
 
50.00% 
 
Liquidity support guarantee of VIE shared with CoVenturer
 
 
 
 
 
60 
 
 
 
 
 
Outstanding principal debt balance of Excel
 
 
 
 
 
140 
 
 
 
 
 
Liquidity support guarantee of Excel
 
 
 
 
 
30 
 
 
 
 
 
Maximum exposure to loss
 
 
 
 
 
 
 
 
 
 
190 
Fxed annual contractual payments under the consignment fuels agreement
 
 
 
 
 
 
 
 
 
 
$ 80 
Inventories (Summary of Inventory) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Summary of inventories
 
 
Crude oil and petroleum products
$ 4,470 
$ 3,138 
Materials and supplies
267 
292 
Inventories
$ 4,737 
$ 3,430 
Inventories (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2012
Inventory Disclosure [Abstract]
 
 
 
 
 
Inventories valued on the last-in, first out (LIFO) basis
$ 4,341 
 
$ 4,341 
 
$ 2,987 
Estimated of excess of current replacement cost over LIFO cost of inventories
8,000 
 
8,000 
 
7,700 
Increase to net income caused by liquidations of LIFO inventory values
$ 2 
$ 1 
$ 19 
$ 86 
 
Assets Held for Sale or Sold (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended 1 Months Ended 1 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Jul. 31, 2013
Immingham Combined Heat and Power Plant [Member]
Marketing and Specialties [Member]
May 31, 2013
Immingham Combined Heat and Power Plant [Member]
Marketing and Specialties [Member]
May 31, 2013
E-Gas Technology Business [Member]
Marketing and Specialties [Member]
Jun. 30, 2012
Trainer Refinery [Member]
Refining [Member]
Assets Held for Sale or Sold (Narrative) [Abstract]
 
 
 
 
 
 
 
 
Net carrying value at time of disposition
 
 
 
 
$ 762 
 
$ 13 
$ 38 
Net property, plant and equipment included in net carrying value of ICHP at time of disposition
 
 
 
 
724 
 
 
 
Allocated goodwill included in net carrying value of ICHP at time of disposition
 
 
 
 
110 
110 
 
 
Noncurrent deferred tax liabilities included in net carrying value of ICHP at time of disposition
 
 
 
 
111 
 
 
 
Deferred before-tax gain on disposition of ICHP to be amortized
 
 
 
 
323 
 
 
 
Before-tax gain on disposition
$ 8 
$ (1)
$ 50 
$ 189 
 
 
$ 48 
$ 189 
Investments, Loans and Long-Term Receivables (Summary of Financial Information for Equity Method Investments) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Summary of financial information
 
 
 
 
Revenues
$ 8,742 
$ 8,347 
$ 24,954 
$ 25,409 
Income before income taxes
821 
1,498 
3,587 
4,074 
Net income
$ 801 
$ 1,449 
$ 3,526 
$ 3,982 
Investments, Loans and Long-Term Receivables (Loans and Long-Term Receivables Narrative) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Corporate Joint Venture One [Member]
Dec. 31, 2012
Corporate Joint Venture One [Member]
Market-based Shareholder Financing Agreement [Member]
Schedule of Equity Method Investments [Line Items]
 
 
 
 
Financing agreement amount, maximum
 
 
 
$ 100 
Amount drawn on facility by MRC
$ 65 
$ 100 
$ 65 
 
Investments, Loans and Long-Term Receivables (Narrative) (Details)
Jul. 2, 2013
WRB Refining LP [Member]
Aug. 31, 2009
Merey Sweeny [Member]
Aug. 28, 2009
Merey Sweeny [Member]
Aug. 27, 2009
Petroleos De Venezuela S.A. (PDVSA) [Member]
Jul. 2, 2013
Conocophillips [Member]
WRB Refining LP [Member]
Aug. 27, 2009
Conocophillips [Member]
Schedule of Equity Method Investments [Line Items]
 
 
 
 
 
 
Percentage of ownership interest
50.00% 
 
 
 
 
50.00% 
Additional ownership interest acquired
 
50.00% 
50.00% 
 
0.40% 
 
Percentage of equity interest of others
 
 
 
50.00% 
 
 
Properties, Plants and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Properties, plants and equipment with the associated accumulated depreciation and amortization
 
 
Gross PP&E
$ 23,891 
$ 23,829 
Accum D&A
8,814 
8,422 
Net PP&E
15,077 
15,407 
Midstream [Member]
 
 
Properties, plants and equipment with the associated accumulated depreciation and amortization
 
 
Gross PP&E
2,642 
2,460 
Accum D&A
1,081 
1,016 
Net PP&E
1,561 
1,444 
Chemicals [Member]
 
 
Properties, plants and equipment with the associated accumulated depreciation and amortization
 
 
Gross PP&E
   
   
Accum D&A
   
   
Net PP&E
   
   
Refining [Member]
 
 
Properties, plants and equipment with the associated accumulated depreciation and amortization
 
 
Gross PP&E
18,894 
17,989 
Accum D&A
6,557 
5,913 
Net PP&E
12,337 
12,076 
Marketing and Specialties [Member]
 
 
Properties, plants and equipment with the associated accumulated depreciation and amortization
 
 
Gross PP&E
1,425 
2,500 
Accum D&A
738 
1,078 
Net PP&E
687 
1,422 
Corporate and Other [Member]
 
 
Properties, plants and equipment with the associated accumulated depreciation and amortization
 
 
Gross PP&E
930 
880 
Accum D&A
438 
415 
Net PP&E
$ 492 
$ 465 
Goodwill (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Goodwill [Line Items]
 
 
Goodwill
$ 3,228 
$ 3,344 
Midstream [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill
518 
518 
Refining [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill
1,933 
1,934 
Marketing and Specialties [Member]
 
 
Goodwill [Line Items]
 
 
Goodwill
$ 777 
$ 892 
Goodwill (Narrative) (Details) (USD $)
0 Months Ended
Jan. 2, 2013
segment
Jul. 31, 2013
Immingham Combined Heat and Power Plant [Member]
Marketing and Specialties [Member]
May 31, 2013
Immingham Combined Heat and Power Plant [Member]
Marketing and Specialties [Member]
Goodwill [Line Items]
 
 
 
Goodwill assigned to former R&M segment prior to realignment, percentage
100.00% 
 
 
Number of operating segments for which goodwill is allocated
3 
 
 
Goodwill impairment recognition required after testing completed
$ 0 
 
 
Allocated goodwill reclassified to reflect held-for-sale classification for the ICHP disposition
 
$ 110,000,000 
$ 110,000,000 
Impairments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Impairment Charges
 
 
 
 
Before-tax impairment charges
$ 1 
$ 248 
$ 26 
$ 566 
Midstream [Member]
 
 
 
 
Impairment Charges
 
 
 
 
Before-tax impairment charges
   
248 
   
524 
Refining [Member]
 
 
 
 
Impairment Charges
 
 
 
 
Before-tax impairment charges
1 
   
2 
42 
Marketing and Specialties [Member]
 
 
 
 
Impairment Charges
 
 
 
 
Before-tax impairment charges
   
   
15 
   
Corporate and Other [Member]
 
 
 
 
Impairment Charges
 
 
 
 
Before-tax impairment charges
    
    
$ 9 
    
Impairments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Property, Plant and Equipment [Line Items]
 
 
 
 
Held-for-use impairment
 
 
$ 27 
$ 43 
Value of assets by major category, measured at fair value on a nonrecurring basis
 
 
 
 
Impairments
1 
248 
26 
566 
Impairment of our investment
 
 
 
480 
Marketing and Specialties [Member]
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
Held-for-use impairment
 
 
15 
 
Value of assets by major category, measured at fair value on a nonrecurring basis
 
 
 
 
Impairments
   
   
15 
   
Midstream Segment [Member] |
Riverhead Terminal [Member]
 
 
 
 
Value of assets by major category, measured at fair value on a nonrecurring basis
 
 
 
 
Impairments
 
43 
 
 
Refining [Member]
 
 
 
 
Value of assets by major category, measured at fair value on a nonrecurring basis
 
 
 
 
Impairments
1 
   
2 
42 
Refining [Member] |
Wilhelmshaven Refinery [Member]
 
 
 
 
Value of assets by major category, measured at fair value on a nonrecurring basis
 
 
 
 
Impairments
 
 
 
42 
Rockies Express Pipeline Llc Rex [Member] |
Midstream Segment [Member]
 
 
 
 
Value of assets by major category, measured at fair value on a nonrecurring basis
 
 
 
 
Impairments
 
205 
 
 
Impairment of our investment
 
$ 480 
 
$ 480 
Earnings per Share (Summary of Earnings Per Share Calculation) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Basic EPS Calculation
 
 
 
 
Net income attributable to Phillips 66
$ 535 
$ 1,599 
$ 2,900 
$ 3,416 
Income allocated to participating securities
(2)
(1)
(4)
(1)
Income available to common stockholders - basic
533 
1,598 
2,896 
3,415 
Weighted-average commons shares outstanding - basic
608,934 1
630,672 1
617,654 1
628,940 1
Earnings per share - basic
$ 0.88 1
$ 2.53 1
$ 4.69 1
$ 5.43 
Diluted EPS Calculation
 
 
 
 
Income available to common stockholders - diluted
$ 535 
$ 1,599 
$ 2,900 
$ 3,416 
Dilutive effect of stock-based compensation
5,585 
7,241 
6,192 
7,645 
Weighted-average commons shares outstanding - diluted
614,519 1
637,913 1
623,846 
636,585 
Earnings per share - diluted
$ 0.87 1
$ 2.51 1
$ 4.65 1
$ 5.37 
Earnings per Share (Narrative) (Details)
1 Months Ended
Apr. 30, 2012
Earnings per Share (Textual) [Abstract]
 
Issuance of common stock at the Separation, shares
625,272,302 
Debt (Narrative) (Details) (USD $)
1 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended
Sep. 30, 2013
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2013
Revolving Credit Facility [Member]
Dec. 31, 2012
Revolving Credit Facility [Member]
Sep. 30, 2013
Trade Receivables Securitization Facility [Member]
Dec. 31, 2012
Trade Receivables Securitization Facility [Member]
Sep. 30, 2013
Phillips 66 Partners LP [Member]
Revolving Credit Facility [Member]
Jul. 24, 2013
Phillips 66 Partners LP [Member]
Revolving Credit Facility [Member]
Sep. 30, 2013
Oil Terminal [Member]
Capital Lease Obligations [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility Initial Maximum Borrowing Capacity
 
 
 
$ 4,000,000,000.0 
 
 
 
 
 
 
Borrowing capacity under revolving credit agreement
 
 
4,000,000,000 
4,500,000,000.0 
 
 
 
 
250,000,000 
 
TradeReceivablesSecuritizationFacilityInitialBorrowingCapacity
1,200,000,000.0 
 
 
 
 
 
 
 
 
 
Borrowing capacity under trade receivables securitization facility
696,000,000 
 
 
 
 
 
 
 
 
 
Line of Credit Facility Additional Capacity Increase Option
 
 
 
 
 
 
 
 
250,000,000 
 
Period Of Revolving Credit Agreement
 
 
 
 
 
 
 
5 years 
 
 
Amount of direct outstanding borrowings under revolving credit agreement
 
 
 
0 
0 
 
 
0 
 
 
Debt resulting from capital lease obligation
 
 
 
 
 
 
 
 
 
177,000,000 
Prepayment on our term loan
500,000,000 
500,000,000 
 
 
 
 
 
 
 
 
Amount of direct outstanding borrowings under trade receivables securitization
 
 
 
 
 
0 
0 
 
 
 
Letters of credit issued
1,337,000,000 
 
 
51,000,000 
51,000,000 
26,000,000 
166,000,000 
 
 
 
Aggregate total capacity available under these facilities
$ 5,100,000,000 
 
 
 
 
 
 
 
 
 
Guarantees (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Sep. 30, 2013
Guarantees of Joint Venture Debt [Member]
Debt Joint Venture [Member]
Sep. 30, 2013
Residual Value Guarantees [Member]
Sep. 30, 2013
Other Guarantees [Member]
Sep. 30, 2013
Indemnifications [Member]
Sep. 30, 2013
Merey Sweeny [Member]
Guarantees of Joint Venture Debt [Member]
Apr. 30, 2012
Merey Sweeny [Member]
Guarantees of Joint Venture Debt [Member]
Guarantees (Textual) [Abstract]
 
 
 
 
 
 
 
 
Percentage of guarantee
 
 
 
 
 
 
 
100.00% 
Stated interest rate of senior notes issued by MSLP, percentage
 
 
 
 
 
 
8.85% 
8.85% 
Maximum potential amount of future payments under the guarantees
 
 
$ 105 
$ 246 
$ 293 
 
$ 224 
 
Remaining terms in years of guarantees outstanding
 
 
12 years 
 
11 years 
 
 
 
Carrying amount of indemnifications
 
 
 
 
 
270 
 
 
Environmental accruals for known contamination included in carrying amount recorded for indemnifications
$ 505 
$ 530 
 
 
 
$ 121 
 
 
Contingencies and Commitments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Contingencies and Commitments (Textual) [Abstract]
 
 
Total environmental accrual
$ 505 
$ 530 
Expected years to incur a substantial amount of expenditures
30 years 
 
Letters of credit issued
1,337 
 
Trade Receivables Securitization Facility [Member]
 
 
Contingencies and Commitments (Textual) [Abstract]
 
 
Letters of credit issued
26 
166 
Revolving Credit Facility [Member]
 
 
Contingencies and Commitments (Textual) [Abstract]
 
 
Letters of credit issued
$ 51 
$ 51 
Derivatives and Financial Instruments (Summary of Commodity Derivative Assets and Liabilities) (Details) (Commodity Derivatives [Member], USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Prepaid Expenses and Other Current Assets [Member]
 
 
Fair value of commodity derivative assets and liabilities, without netting
 
 
Commodity derivative assets, fair value gross
$ 1,026 1
$ 767 1
Other Assets [Member]
 
 
Fair value of commodity derivative assets and liabilities, without netting
 
 
Commodity derivative assets, fair value gross
11 1
3 1
Other Accruals [Member]
 
 
Fair value of commodity derivative assets and liabilities, without netting
 
 
Commodity derivative liabilities, fair value gross
1,038 1
766 1
Other Liabilities and Deferred Credits [Member]
 
 
Fair value of commodity derivative assets and liabilities, without netting
 
 
Commodity derivative liabilities, fair value gross
$ 8 1
$ 3 1
Derivatives and Financial Instruments (Summary of Gains/(Losses) From Commodity Derivatives) (Details) (Commodity Derivatives [Member], USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Sales and Other Operating Revenues [Member]
 
 
 
 
Summary of gains (losses) from commodity derivatives
 
 
 
 
Gains (losses) from commodity derivatives
$ (44)1
$ (232)1
$ 74 1
$ (48)
Equity in Earnings of Affiliates [Member]
 
 
 
 
Summary of gains (losses) from commodity derivatives
 
 
 
 
Gains (losses) from commodity derivatives
(12)1
5 1
(13)1
5 
Other Income [Member]
 
 
 
 
Summary of gains (losses) from commodity derivatives
 
 
 
 
Gains (losses) from commodity derivatives
(24)1
(9)1
3 1
44 
Purchased Crude Oil and Products [Member]
 
 
 
 
Summary of gains (losses) from commodity derivatives
 
 
 
 
Gains (losses) from commodity derivatives
$ (78)1
$ (86)1
$ 85 1
$ 7 
Derivatives and Financial Instruments (Summary of Outstanding Commodity Derivative Contracts) (Details)
Sep. 30, 2013
MMBbls
Dec. 31, 2012
MMBbls
Commodity
 
 
Crude oil, refined products and NGL (millions of barrels)
(25)
(8)
Derivatives and Financial Instruments (Narrative) (Details)
9 Months Ended 12 Months Ended
Sep. 30, 2013
Dec. 31, 2012
Financial instruments and derivative contracts (Textual) [Abstract]
 
 
Estimated percentage of derivative contract volume expiring within twelve months
99.00% 
99.00% 
Payment terms of receivables
30 days or less 
 
Fair Value Measurements (Summary of Fair Value of Derivative Assets and Liabilities and Effect of Counterparty Netting) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Effect of counterparty netting, commodity derivative assets
$ (943)
$ (675)
Effect of collateral netting, commodity derivative assets
(1)
(8)
Rabbi trust assets
61 
50 
Total assets, fair value disclosure gross
1,098 
817 
Effect of counterparty netting, commodity derivative liabilities
(943)
(675)
Effect of collateral netting, commodity derivative liabilities
(23)
(42)
Difference in carrying value and fair value
(193)
(590)
Total liabilities, fair value disclosure gross
7,198 
8,324 
Net carrying value presented on balance sheet, commodity derivative liabilities and debt
6,039 
7,017 
Carrying (Reported) Amount, Fair Value Disclosure [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Rabbi trust assets
61 
50 
Net carrying value presented on balance sheet, commodity derivative assets and investments
154 
134 
Floating Rate Debt [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
50 
1,050 
Net carrying value presented on balance sheet, debt
50 
1,050 
Fixed Rate Debt Excluding Capital Leases [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
6,102 1
6,508 1
Net carrying value presented on balance sheet, debt
5,909 1
5,918 1
Difference in carrying value and fair value
(193)
(590)1
Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Rabbi trust assets
61 
50 
Total assets, fair value disclosure gross
753 
430 
Total liabilities, fair value disclosure gross
755 
1,443 
Level 1 [Member] |
Floating Rate Debt [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
50 
1,050 
Level 1 [Member] |
Fixed Rate Debt Excluding Capital Leases [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
0 
   1
Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Rabbi trust assets
0 
   
Total assets, fair value disclosure gross
340 
385 
Total liabilities, fair value disclosure gross
6,442 
6,880 
Level 2 [Member] |
Floating Rate Debt [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
0 
   
Level 2 [Member] |
Fixed Rate Debt Excluding Capital Leases [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
6,102 
6,508 1
Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Rabbi trust assets
0 
   
Total assets, fair value disclosure gross
5 
2 
Total liabilities, fair value disclosure gross
1 
1 
Level 3 [Member] |
Floating Rate Debt [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
0 
   
Level 3 [Member] |
Fixed Rate Debt Excluding Capital Leases [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Debt excluding capital leases, fair value gross
0 
   1
Exchange-cleared Instruments [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
960 
689 
Effect of counterparty netting, commodity derivative assets
931 
(672)
Effect of collateral netting, commodity derivative assets
1 
(8)
Net carrying value presented on balance sheet, commodity derivative assets
28 
9 
Commodity derivative liabilities, fair value gross
954 
721 
Effect of counterparty netting, commodity derivative liabilities
931 
(672)
Effect of collateral netting, commodity derivative liabilities
23 
(42)
Net carrying value presented on balance sheet, commodity derivative liabilities
   
7 
Cash collateral received or paid, not offset on balance sheet, commodity derivative liabilities
 
(7)
Exchange-cleared Instruments [Member] |
Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
692 
380 
Commodity derivative liabilities, fair value gross
705 
393 
Exchange-cleared Instruments [Member] |
Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
268 
309 
Commodity derivative liabilities, fair value gross
249 
328 
Exchange-cleared Instruments [Member] |
Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
0 
   
Commodity derivative liabilities, fair value gross
0 
   
OTC Instruments [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
25 
15 
Effect of counterparty netting, commodity derivative assets
11 
(7)
Net carrying value presented on balance sheet, commodity derivative assets
14 
8 
Commodity derivative liabilities, fair value gross
39 
13 
Effect of counterparty netting, commodity derivative liabilities
11 
(7)
Net carrying value presented on balance sheet, commodity derivative liabilities
28 
6 
OTC Instruments [Member] |
Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
0 
   
Commodity derivative liabilities, fair value gross
0 
   
OTC Instruments [Member] |
Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
25 
15 
Commodity derivative liabilities, fair value gross
39 
13 
OTC Instruments [Member] |
Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
0 
   
Commodity derivative liabilities, fair value gross
0 
   
Physical Forward Contracts [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
52 2
63 2
Effect of counterparty netting, commodity derivative assets
1 
4 2
Net carrying value presented on balance sheet, commodity derivative assets
51 2
67 2
Commodity derivative liabilities, fair value gross
53 2
32 2
Effect of counterparty netting, commodity derivative liabilities
1 
4 2
Net carrying value presented on balance sheet, commodity derivative liabilities
52 2
36 2
Physical Forward Contracts [Member] |
Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
0 
   2
Commodity derivative liabilities, fair value gross
0 
   2
Physical Forward Contracts [Member] |
Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
47 
61 2
Commodity derivative liabilities, fair value gross
52 
31 2
Physical Forward Contracts [Member] |
Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Commodity derivative assets, fair value gross
5 
2 2
Commodity derivative liabilities, fair value gross
$ 1 
$ 1 2
Fair Value Measurements (Summary of Nonrecurring Fair Value Measurements) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Before-tax loss on net properties, plants and equipment (held for use)
$ 27 
$ 43 
Before-tax loss on net properties, plants and equipment (held for sale)
 
42 
Equity Method Investment, Other than Temporary Impairment
 
480 
Fair Value, Measurements, Nonrecurring [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Net properties, plants and equipment (held for use)
22 1
33 1
Net properties, plants and equipment (held for sale)
 
32 1
Equity Method Investments, Fair Value Disclosure
 
283 1
Fair Value, Measurements, Nonrecurring [Member] |
Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Net properties, plants and equipment (held for use)
22 
33 
Net properties, plants and equipment (held for sale)
 
32 
Fair Value, Measurements, Nonrecurring [Member] |
Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Equity Method Investments, Fair Value Disclosure
 
$ 283 
Fair Value Measurements (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 9 Months Ended 9 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2012
Sep. 30, 2012
Terminals and Storage Facilities [Member]
Sep. 30, 2012
Equipment [Member]
Sep. 30, 2013
M&S Segment [Member]
Dec. 31, 2012
M&S Segment [Member]
Sep. 30, 2013
M&S Segment [Member]
Composite Graphite Business [Member]
Sep. 30, 2013
Corporate and Other [Member]
Dec. 31, 2012
Corporate and Other [Member]
Sep. 30, 2013
Corporate and Other [Member]
Corporate Property [Member]
Sep. 30, 2013
Midstream Segment [Member]
Dec. 31, 2012
Midstream Segment [Member]
Sep. 30, 2012
Midstream Segment [Member]
Rockies Express Pipeline Llc Rex [Member]
Sep. 30, 2012
Midstream Segment [Member]
Rockies Express Pipeline Llc Rex [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying amount of net PP&E held for use
$ 15,077 
 
$ 15,407 
$ 76 
 
$ 687 
$ 1,422 
$ 18 
$ 492 
$ 465 
$ 31 
$ 1,561 
$ 1,444 
 
 
Before-tax loss on net properties, plants and equipment (held for use)
27 
43 
 
43 
 
15 
 
18 
 
 
9 
 
 
 
 
Fair value of net PP&E held for use
 
 
 
33 
 
 
 
 
 
 
22 
 
 
 
 
Equity Method Investments, Fair Value Disclosure
 
 
 
 
 
 
 
 
 
 
 
 
 
283 
283 
Equity Method Investment, Other than Temporary Impairment
 
480 
 
 
 
 
 
 
 
 
 
 
 
480 
480 
Carrying amount of net PP&E held for sale
 
 
 
 
74 
 
 
 
 
 
 
 
 
 
 
Fair value of net PP&E held for sale
 
 
 
 
32 
 
 
 
 
 
 
 
 
 
 
Before-tax loss on net PP&E held for sale
 
$ 42 
 
 
$ 42 
 
 
 
 
 
 
 
 
 
 
Leases (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Leases, Capital [Abstract]
 
Total future minimum lease payments recorded to PP&E and debt
$ 177 
Future minimum lease payments - 2014
5 
Future minimum lease payments - 2015
6 
Future minimum lease payments - 2016
6 
Future minimum lease payments - 2017
7 
Future minimum lease payments - 2018
7 
Future minimum lease payments - 2019 and after
144 
Total estimated payments in 2013 under this lease
$ 2 
Employee Benefit Plans (Summary of Components of Net Periodic Benefit Cost) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
United States Pension Plans of U S Entity, Defined Benefit [Member]
 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
Service cost
$ 31 
$ 30 
$ 93 
$ 51 
Interest cost
23 
25 
69 
41 
Expected return on plan assets
(30)
(30)
(90)
(50)
Amortization of prior service cost (credit)
1 
   
2 
1 
Recognized net actuarial loss (gain)
21 
19 
63 
31 
Subtotal net periodic benefit cost
46 
44 
137 
74 
Allocated benefit cost from ConocoPhillips
 
   
 
71 
Total net periodic benefit cost
46 
44 
137 
145 
Foreign Pension Plans, Defined Benefit [Member]
 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
Service cost
9 
7 
27 
14 
Interest cost
7 
8 
23 
17 
Expected return on plan assets
(7)
(7)
(22)
(14)
Amortization of prior service cost (credit)
   
 
(1)
 
Recognized net actuarial loss (gain)
4 
2 
12 
5 
Subtotal net periodic benefit cost
13 
10 
39 
22 
Allocated benefit cost from ConocoPhillips
 
   
 
13 
Total net periodic benefit cost
13 
10 
39 
35 
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
Service cost
2 
1 
6 
2 
Interest cost
2 
2 
5 
3 
Amortization of prior service cost (credit)
   
 
(1)
 
Recognized net actuarial loss (gain)
   
(1)
   
(1)
Subtotal net periodic benefit cost
4 
2 
10 
4 
Allocated benefit cost from ConocoPhillips
 
   
 
7 
Total net periodic benefit cost
$ 4 
$ 2 
$ 10 
$ 11 
Employee Benefit Plans (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2013
United States Pension Plans of U S Entity, Defined Benefit [Member]
 
Employee Benefit Plans (Textual) [Abstract]
 
Company contributions to plans
$ 136 
Foreign Pension Plans, Defined Benefit [Member]
 
Employee Benefit Plans (Textual) [Abstract]
 
Company contributions to plans
36 
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year
$ 20 
Accumulated Other Comprehensive Income (Loss) (Summary of the Components of Accumulated Other Comprehensive Income (Loss) and Detail on Reclassifications) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Changes in accumulated other comprehensive income (loss) by component
 
 
 
 
Accumulated other comprehensive income (loss), beginning balance
 
 
$ (314)
 
Other comprehensive income (loss) before reclassifications
 
 
(99)
 
Actuarial losses reclassified from accumulated other comprehensive income (loss)
 
 
46 1
 
Other Comprehensive Income (Loss), Net of Tax
199 
229 
(53)
290 
Accumulated other comprehensive income (loss), ending balance
(367)
 
(367)
 
Defined Benefit Plans [Member]
 
 
 
 
Changes in accumulated other comprehensive income (loss) by component
 
 
 
 
Accumulated other comprehensive income (loss), beginning balance
 
 
(778)
 
Other comprehensive income (loss) before reclassifications
 
 
(1)
 
Actuarial losses reclassified from accumulated other comprehensive income (loss)
 
 
46 2
 
Other Comprehensive Income (Loss), Net of Tax
 
 
45 
 
Accumulated other comprehensive income (loss), ending balance
(733)
 
(733)
 
Foreign Curency Translation [Member]
 
 
 
 
Changes in accumulated other comprehensive income (loss) by component
 
 
 
 
Accumulated other comprehensive income (loss), beginning balance
 
 
466 
 
Other comprehensive income (loss) before reclassifications
 
 
(99)
 
Other Comprehensive Income (Loss), Net of Tax
 
 
(99)
 
Accumulated other comprehensive income (loss), ending balance
367 
 
367 
 
Hedging [Member]
 
 
 
 
Changes in accumulated other comprehensive income (loss) by component
 
 
 
 
Accumulated other comprehensive income (loss), beginning balance
 
 
(2)
 
Other comprehensive income (loss) before reclassifications
 
 
1 
 
Other Comprehensive Income (Loss), Net of Tax
 
 
1 
 
Accumulated other comprehensive income (loss), ending balance
$ (1)
 
$ (1)
 
Cash Flow Information (Summary of Cash Flow Information) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Supplemental Cash Flow Information [Abstract]
 
 
Increase in net PP&E and debt related to capital lease obligation
$ 177 
 
Transfer of net PP&E in accordance with the Separation and Distribution Agreement with ConocoPhillips
 
374 
Transfer of employee benefit obligations in accordance with the Separation and Distribution Agreement with ConocoPhillips
 
1,234 
Increase in deferred tax assets associated with the employee benefit liabilities transferred in accordance with the Separation and Distribution Agreement with ConocoPhillips
 
461 
Interest
146 
28 
Income taxes
$ 1,001 1
$ 927 1
Related Party Transactions (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Related Party Transaction [Line Items]
 
 
 
 
Sales to related party
$ 2,064 1
$ 1,883 1
$ 5,866 1
$ 6,119 1
Purchases from related party
4,998 2
4,176 2
13,762 2
18,984 2
Net charges from related party
28 3
32 3
80 3
175 3
ConocoPhillips [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Sales to related party
 
 
 
381 
Purchases from related party
 
 
 
5,328 
Net charges from related party
 
 
 
$ 70 
Income Taxes (Narrative) (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Income Taxes (Textual) [Abstract]
 
 
 
 
Effective tax rate, percent
35.00% 
35.00% 
34.00% 
37.00% 
Phillips 66 Partners LP (Narrative) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
1 Months Ended 1 Months Ended
Sep. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Dec. 31, 2011
Jul. 27, 2013
Phillips 66 Partners LP [Member]
Jul. 27, 2013
Phillips 66 Partners LP [Member]
Sep. 30, 2013
Phillips 66 Partners LP [Member]
Jul. 27, 2013
Phillips 66 Partners LP [Member]
Common Units [Member]
Jul. 24, 2013
Phillips 66 Partners LP [Member]
Common Units [Member]
Sep. 30, 2013
Noncontrolling Interest [Member]
Phillips 66 Partners LP [Member]
Subsidiary or Equity Method Investee [Line Items]
 
 
 
 
 
 
 
 
 
 
Phillips 66 Partners common units issued in initial public offering
 
 
 
 
 
 
 
18,888,750 
 
 
Price of Phillips 66 Partners common units, price per unit
 
 
 
 
 
 
 
 
$ 23.00 
 
Phillips 66 Partners common unit over-allotment option exercised by underwriters, units
 
 
 
 
 
 
 
2,463,750 
 
 
Net proceeds received by Phillips 66 Partners from initial public offering sale of common units
 
 
 
 
 
 
 
$ 404 
 
 
Limited partnership interest in Phillips 66 Partners, percentage
 
 
 
 
71.70% 
 
 
 
 
 
General partnership interest in Phillips 66 Partners, percentage
 
 
 
 
2.00% 
 
 
 
 
 
Limited partner interest in Phillips 66 Partners owned by public, percentage
 
 
 
 
 
26.30% 
 
 
 
 
Public's ownership interest in Phillips 66 Partners reflected as a noncontrolling interest
444 
31 
 
 
 
 
 
 
 
408 
Phillips 66 Partners' cash and cash equivalents
$ 5,942 1
$ 3,474 1
$ 4,430 
    
 
 
$ 422 
 
 
 
Condensed Consolidating Financial Information (Income Statement) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Sales and other operating revenues
$ 44,201 1
$ 42,945 1
$ 128,704 1
$ 135,475 1
Equity in earnings of affiliates
647 
959 
2,304 
2,508 
Net gain (loss) on dispositions
8 
(1)
50 
189 
Other income (loss)
(7)
4 
65 
82 
Intercompany revenues
   
   
   
   
Total Revenues and Other Income
44,849 
43,907 
131,123 
138,254 
Purchased crude oil and products
38,746 
36,189 
111,287 
116,915 
Operating expenses
987 
884 
2,998 
2,960 
Selling, general and administrative expenses
354 
432 
1,060 
1,261 
Depreciation and amortization
236 
229 
712 
669 
Impairments
1 
248 
26 
566 
Taxes other than income taxes
3,624 1
3,410 1
10,450 1
10,305 1
Accretion on discounted liabilities
6 
7 
18 
18 
Interest and debt expense
68 
74 
207 
170 
Foreign currency transaction (gains) losses
1 
(15)
(16)
(22)
Total Costs and Expenses
44,023 
41,458 
126,742 
132,842 
Income before income taxes
826 
2,449 
4,381 
5,412 
Provision (benefit) for income taxes
286 
848 
1,471 
1,991 
Net income
540 
1,601 
2,910 
3,421 
Less: net income attributable to noncontrolling interests
5 
2 
10 
5 
Net Income Attributable to Phillips 66
535 
1,599 
2,900 
3,416 
Comprehensive Income
739 
1,830 
2,857 
3,711 
Phillips 66 [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Sales and other operating revenues
   
   
   
   
Equity in earnings of affiliates
579 
1,652 
3,035 
3,514 
Net gain (loss) on dispositions
   
   
   
   
Other income (loss)
(1)
   
(3)
   
Intercompany revenues
   
1 
   
1 
Total Revenues and Other Income
578 
1,653 
3,032 
3,515 
Purchased crude oil and products
   
   
   
   
Operating expenses
   
   
   
   
Selling, general and administrative expenses
1 
2 
5 
3 
Depreciation and amortization
   
   
   
   
Impairments
   
   
   
   
Taxes other than income taxes
   
   
   
   
Accretion on discounted liabilities
   
   
   
   
Interest and debt expense
66 
71 
200 
140 
Foreign currency transaction (gains) losses
   
   
   
   
Total Costs and Expenses
67 
73 
205 
143 
Income before income taxes
511 
1,580 
2,827 
3,372 
Provision (benefit) for income taxes
(24)
(19)
(73)
(44)
Net income
535 
1,599 
2,900 
3,416 
Less: net income attributable to noncontrolling interests
   
   
   
   
Net Income Attributable to Phillips 66
535 
1,599 
2,900 
3,416 
Comprehensive Income
734 
1,827 
2,847 
3,026 
Phillips 66 Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Sales and other operating revenues
29,196 
28,495 
86,169 
89,075 
Equity in earnings of affiliates
786 
1,071 
2,735 
2,786 
Net gain (loss) on dispositions
8 
(1)
49 
190 
Other income (loss)
(13)
6 
36 
(40)
Intercompany revenues
258 
551 
987 
2,047 
Total Revenues and Other Income
30,235 
30,122 
89,976 
94,058 
Purchased crude oil and products
26,864 
25,037 
78,037 
80,833 
Operating expenses
815 
725 
2,435 
2,448 
Selling, general and administrative expenses
244 
333 
713 
963 
Depreciation and amortization
182 
170 
542 
490 
Impairments
1 
44 
(2)
45 
Taxes other than income taxes
1,324 
1,302 
3,828 
3,922 
Accretion on discounted liabilities
4 
6 
14 
13 
Interest and debt expense
4 
4 
10 
24 
Foreign currency transaction (gains) losses
1 
   
1 
   
Total Costs and Expenses
29,439 
27,621 
85,578 
88,738 
Income before income taxes
796 
2,501 
4,398 
5,320 
Provision (benefit) for income taxes
217 
849 
1,363 
1,806 
Net income
579 
1,652 
3,035 
3,514 
Less: net income attributable to noncontrolling interests
   
   
   
   
Net Income Attributable to Phillips 66
579 
1,652 
3,035 
3,514 
Comprehensive Income
777 
1,880 
2,982 
3,632 
All Other Subsidiaries [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Sales and other operating revenues
15,005 
14,450 
42,535 
46,400 
Equity in earnings of affiliates
166 
161 
401 
346 
Net gain (loss) on dispositions
   
   
1 
(1)
Other income (loss)
7 
(2)
32 
122 
Intercompany revenues
5,482 
6,192 
16,183 
18,474 
Total Revenues and Other Income
20,660 
20,801 
59,152 
65,341 
Purchased crude oil and products
17,506 
17,859 
50,073 
56,541 
Operating expenses
178 
171 
583 
555 
Selling, general and administrative expenses
133 
119 
412 
318 
Depreciation and amortization
54 
59 
170 
179 
Impairments
   
204 
28 
521 
Taxes other than income taxes
2,301 
2,109 
6,623 
6,384 
Accretion on discounted liabilities
2 
1 
4 
5 
Interest and debt expense
83 
1 
253 
2 
Foreign currency transaction (gains) losses
0 
(15)
(17)
(22)
Total Costs and Expenses
20,257 
20,508 
58,129 
64,483 
Income before income taxes
403 
293 
1,023 
858 
Provision (benefit) for income taxes
93 
18 
181 
229 
Net income
310 
275 
842 
629 
Less: net income attributable to noncontrolling interests
5 
2 
10 
5 
Net Income Attributable to Phillips 66
305 
273 
832 
624 
Comprehensive Income
495 
487 
754 
617 
Consolidating Adjustments [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Sales and other operating revenues
   
   
   
   
Equity in earnings of affiliates
(884)
(1,925)
(3,867)
(4,138)
Net gain (loss) on dispositions
   
   
   
   
Other income (loss)
   
   
   
   
Intercompany revenues
(5,740)
(6,744)
(17,170)
(20,522)
Total Revenues and Other Income
(6,624)
(8,669)
(21,037)
(24,660)
Purchased crude oil and products
(5,624)
(6,707)
(16,823)
(20,459)
Operating expenses
(6)
(12)
(20)
(43)
Selling, general and administrative expenses
(24)
(22)
(70)
(23)
Depreciation and amortization
   
   
   
   
Impairments
   
   
   
   
Taxes other than income taxes
(1)
(1)
(1)
(1)
Accretion on discounted liabilities
   
   
   
   
Interest and debt expense
(85)
(2)
(256)
4 
Foreign currency transaction (gains) losses
   
   
   
   
Total Costs and Expenses
(5,740)
(6,744)
(17,170)
(20,522)
Income before income taxes
(884)
(1,925)
(3,867)
(4,138)
Provision (benefit) for income taxes
   
   
   
   
Net income
(884)
(1,925)
(3,867)
(4,138)
Less: net income attributable to noncontrolling interests
   
   
   
   
Net Income Attributable to Phillips 66
(884)
(1,925)
(3,867)
(4,138)
Comprehensive Income
$ (1,267)
$ (2,364)
$ (3,726)
$ (3,564)
Condensed Consolidating Financial Information (Balance Sheet) (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash and cash equivalents
$ 5,942 1
$ 3,474 1
$ 4,430 
    
Accounts and notes receivable
9,744 
10,403 
 
 
Inventories
4,737 
3,430 
 
 
Prepaid expenses and other current assets
662 
655 
 
 
Total Current Assets
21,085 
17,962 
 
 
Investments and long-term receivables
10,728 
10,471 
 
 
Net properties, plants and equipment
15,077 
15,407 
 
 
Goodwill
3,228 
3,344 
 
 
Intangibles
713 
724 
 
 
Other assets
152 
165 
 
 
Total Assets
50,983 
48,073 
 
 
Accounts payable
12,744 
10,710 
 
 
Short-term debt
24 
13 
 
 
Accrued income and other taxes
889 
901 
 
 
Employee benefit obligations
332 
441 
 
 
Other accruals
691 
417 
 
 
Total Current Liabilities
14,680 
12,482 
 
 
Long-term debt
6,132 
6,961 
 
 
Asset retirement obligations and accrued environmental costs
687 
740 
 
 
Deferred income taxes
5,633 
5,444 
 
 
Employee benefit obligations
1,286 
1,325 
 
 
Other liabilities and deferred credits
571 
315 
 
 
Total Liabilities
28,989 
27,267 
 
 
Common stock
16,887 
18,376 
 
 
Retained earnings
5,030 
2,713 
 
 
Accumulated other comprehensive income (loss)
(367)
(314)
 
 
Noncontrolling interests
444 
31 
 
 
Total Liabilities and Equity
50,983 
48,073 
 
 
Phillips 66 [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash and cash equivalents
   
   
   
   
Accounts and notes receivable
10 
47 
 
 
Inventories
   
   
 
 
Prepaid expenses and other current assets
8 
11 
 
 
Total Current Assets
18 
58 
 
 
Investments and long-term receivables
31,764 
28,796 
 
 
Net properties, plants and equipment
   
   
 
 
Goodwill
   
   
 
 
Intangibles
   
   
 
 
Other assets
40 
78 
 
 
Total Assets
31,822 
28,932 
 
 
Accounts payable
   
17 
 
 
Short-term debt
   
   
 
 
Accrued income and other taxes
   
   
 
 
Employee benefit obligations
   
   
 
 
Other accruals
98 
50 
 
 
Total Current Liabilities
98 
67 
 
 
Long-term debt
5,796 
6,795 
 
 
Asset retirement obligations and accrued environmental costs
   
   
 
 
Deferred income taxes
   
   
 
 
Employee benefit obligations
   
   
 
 
Other liabilities and deferred credits
4,516 
1,434 
 
 
Total Liabilities
10,410 
8,296 
 
 
Common stock
16,887 
18,376 
 
 
Retained earnings
5,031 
2,713 
 
 
Accumulated other comprehensive income (loss)
(506)
(453)
 
 
Noncontrolling interests
   
   
 
 
Total Liabilities and Equity
31,822 
28,932 
 
 
Phillips 66 Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash and cash equivalents
1,886 
2,410 
2,891 
   
Accounts and notes receivable
3,010 
2,889 
 
 
Inventories
2,509 
1,938 
 
 
Prepaid expenses and other current assets
291 
403 
 
 
Total Current Assets
7,696 
7,640 
 
 
Investments and long-term receivables
24,652 
20,798 
 
 
Net properties, plants and equipment
11,788 
11,714 
 
 
Goodwill
3,226 
3,344 
 
 
Intangibles
696 
710 
 
 
Other assets
113 
114 
 
 
Total Assets
48,171 
44,320 
 
 
Accounts payable
7,369 
7,014 
 
 
Short-term debt
18 
13 
 
 
Accrued income and other taxes
273 
245 
 
 
Employee benefit obligations
287 
391 
 
 
Other accruals
256 
279 
 
 
Total Current Liabilities
8,203 
7,942 
 
 
Long-term debt
156 
165 
 
 
Asset retirement obligations and accrued environmental costs
525 
563 
 
 
Deferred income taxes
4,595 
4,478 
 
 
Employee benefit obligations
1,060 
1,094 
 
 
Other liabilities and deferred credits
2,010 
1,435 
 
 
Total Liabilities
16,549 
15,677 
 
 
Common stock
25,937 
25,951 
 
 
Retained earnings
6,191 
3,145 
 
 
Accumulated other comprehensive income (loss)
(506)
(453)
 
 
Noncontrolling interests
   
   
 
 
Total Liabilities and Equity
48,171 
44,320 
 
 
All Other Subsidiaries [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash and cash equivalents
4,056 
1,064 
1,539 
   
Accounts and notes receivable
7,353 
8,456 
 
 
Inventories
2,228 
1,492 
 
 
Prepaid expenses and other current assets
363 
241 
 
 
Total Current Assets
14,000 
11,253 
 
 
Investments and long-term receivables
7,267 
6,235 
 
 
Net properties, plants and equipment
3,289 
3,693 
 
 
Goodwill
2 
   
 
 
Intangibles
17 
14 
 
 
Other assets
2 
9 
 
 
Total Assets
24,577 
21,204 
 
 
Accounts payable
6,004 
4,668 
 
 
Short-term debt
6 
   
 
 
Accrued income and other taxes
616 
656 
 
 
Employee benefit obligations
45 
50 
 
 
Other accruals
337 
88 
 
 
Total Current Liabilities
7,008 
5,462 
 
 
Long-term debt
180 
1 
 
 
Asset retirement obligations and accrued environmental costs
162 
177 
 
 
Deferred income taxes
1,041 
1,002 
 
 
Employee benefit obligations
226 
231 
 
 
Other liabilities and deferred credits
6,162 
5,768 
 
 
Total Liabilities
14,779 
12,641 
 
 
Common stock
8,447 
8,287 
 
 
Retained earnings
837 
87 
 
 
Accumulated other comprehensive income (loss)
70 
158 
 
 
Noncontrolling interests
444 
31 
 
 
Total Liabilities and Equity
24,577 
21,204 
 
 
Consolidating Adjustments [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash and cash equivalents
   
   
   
   
Accounts and notes receivable
(629)
(989)
 
 
Inventories
   
   
 
 
Prepaid expenses and other current assets
   
   
 
 
Total Current Assets
(629)
(989)
 
 
Investments and long-term receivables
(52,955)
(45,358)
 
 
Net properties, plants and equipment
   
   
 
 
Goodwill
   
   
 
 
Intangibles
   
   
 
 
Other assets
(3)
(36)
 
 
Total Assets
(53,587)
(46,383)
 
 
Accounts payable
(629)
(989)
 
 
Short-term debt
   
   
 
 
Accrued income and other taxes
   
   
 
 
Employee benefit obligations
   
   
 
 
Other accruals
   
   
 
 
Total Current Liabilities
(629)
(989)
 
 
Long-term debt
   
   
 
 
Asset retirement obligations and accrued environmental costs
   
   
 
 
Deferred income taxes
(3)
(36)
 
 
Employee benefit obligations
   
   
 
 
Other liabilities and deferred credits
(12,117)
(8,322)
 
 
Total Liabilities
(12,749)
(9,347)
 
 
Common stock
(34,384)
(34,238)
 
 
Retained earnings
(7,029)
(3,232)
 
 
Accumulated other comprehensive income (loss)
575 
434 
 
 
Noncontrolling interests
   
   
 
 
Total Liabilities and Equity
$ (53,587)
$ (46,383)
 
 
Condensed Consolidating Financial Information (Condensed Statement of Cash Flows) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Condensed Financial Statements, Captions [Line Items]
 
 
Net Cash Provided by (Used In) Operating Activities
$ 5,130 
$ 2,991 
Capital expenditures and investments
(1,170)
(827)
Proceeds from asset dispositions
1,188 
259 
Advances/loans—related parties
(65)
(100)
Collection of advances/loans—related parties
100 
   
Net Cash Provided by (Used in) Investing Activities
53 
(668)
Contributions from (distributions to) ConocoPhillips
   
(5,255)
Issuance of debt
   
7,794 
Repayment of debt
(1,015)
(206)
Issuance of common stock
(4)
23 
Repurchase of common stock
(1,602)
(111)
Dividends paid on common stock
(575)
(125)
Net proceeds from issuance of Phillips 66 Partners LP common units
404 
   
Other
(5)
(40)
Net Cash Provided by (Used in) Financing Activities
(2,797)
2,080 
Effect of Exchange Rate on Cash and Cash Equivalents
82 
27 
Net Change in Cash and Cash Equivalents
2,468 
4,430 
Cash and cash equivalents at beginning of period
3,474 1
   
Cash and Cash Equivalents at End of Period
5,942 1
4,430 
Phillips 66 [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net Cash Provided by (Used In) Operating Activities
3,190 
(44)
Capital expenditures and investments
   
   
Proceeds from asset dispositions
   
   
Advances/loans—related parties
   
   
Collection of advances/loans—related parties
   
   
Net Cash Provided by (Used in) Investing Activities
   
   
Contributions from (distributions to) ConocoPhillips
 
(7,469)
Issuance of debt
 
7,794 
Repayment of debt
(1,000)
   
Issuance of common stock
(4)
23 
Repurchase of common stock
(1,602)
(111)
Dividends paid on common stock
(575)
(125)
Net proceeds from issuance of Phillips 66 Partners LP common units
   
 
Other
(9)
(68)
Net Cash Provided by (Used in) Financing Activities
(3,190)
44 
Effect of Exchange Rate on Cash and Cash Equivalents
   
   
Net Change in Cash and Cash Equivalents
   
   
Cash and cash equivalents at beginning of period
   
   
Cash and Cash Equivalents at End of Period
   
   
Phillips 66 Company [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net Cash Provided by (Used In) Operating Activities
106 
7,300 
Capital expenditures and investments
(683)
(606)
Proceeds from asset dispositions
62 
210 
Advances/loans—related parties
   
   
Collection of advances/loans—related parties
   
   
Net Cash Provided by (Used in) Investing Activities
(621)
(396)
Contributions from (distributions to) ConocoPhillips
 
(3,837)
Issuance of debt
 
   
Repayment of debt
(14)
(204)
Issuance of common stock
   
   
Repurchase of common stock
   
   
Dividends paid on common stock
   
   
Net proceeds from issuance of Phillips 66 Partners LP common units
   
 
Other
5 
28 
Net Cash Provided by (Used in) Financing Activities
(9)
(4,013)
Effect of Exchange Rate on Cash and Cash Equivalents
   
   
Net Change in Cash and Cash Equivalents
(524)
2,891 
Cash and cash equivalents at beginning of period
2,410 
   
Cash and Cash Equivalents at End of Period
1,886 
2,891 
All Other Subsidiaries [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net Cash Provided by (Used In) Operating Activities
1,904 
(4,265)
Capital expenditures and investments
(508)
(231)
Proceeds from asset dispositions
1,126 
49 
Advances/loans—related parties
(65)
(100)
Collection of advances/loans—related parties
100 
7 
Net Cash Provided by (Used in) Investing Activities
653 
(275)
Contributions from (distributions to) ConocoPhillips
 
6,051 
Issuance of debt
 
   
Repayment of debt
(1)
(9)
Issuance of common stock
   
   
Repurchase of common stock
   
   
Dividends paid on common stock
(70)
   
Net proceeds from issuance of Phillips 66 Partners LP common units
404 
 
Other
20 
10 
Net Cash Provided by (Used in) Financing Activities
353 
6,052 
Effect of Exchange Rate on Cash and Cash Equivalents
82 
27 
Net Change in Cash and Cash Equivalents
2,992 
1,539 
Cash and cash equivalents at beginning of period
1,064 
   
Cash and Cash Equivalents at End of Period
4,056 
1,539 
Consolidating Adjustments [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net Cash Provided by (Used In) Operating Activities
(70)
   
Capital expenditures and investments
21 
10 
Proceeds from asset dispositions
   
   
Advances/loans—related parties
   
   
Collection of advances/loans—related parties
   
(7)
Net Cash Provided by (Used in) Investing Activities
21 
3 
Contributions from (distributions to) ConocoPhillips
 
   
Issuance of debt
 
   
Repayment of debt
   
7 
Issuance of common stock
   
   
Repurchase of common stock
   
   
Dividends paid on common stock
70 
   
Net proceeds from issuance of Phillips 66 Partners LP common units
   
 
Other
(21)
(10)
Net Cash Provided by (Used in) Financing Activities
49 
(3)
Effect of Exchange Rate on Cash and Cash Equivalents
   
   
Net Change in Cash and Cash Equivalents
   
   
Cash and cash equivalents at beginning of period
   
   
Cash and Cash Equivalents at End of Period
   
   
Condensed Consolidating Financial Information (Narrative) (Details) (USD $)
In Billions, unless otherwise specified
Sep. 30, 2013
Condensed financial statements captions line iItems [Abstract]
 
Senior notes issued by Phillips 66
$ 5.8 
Percentage of ownership in subsidiary
100.00%