Phillips 66 PSX · USD

Segment Disclosures and Related Information Our operating segments are:1)Midstream—Provides crude oil and refined petroleum product transportation, terminaling and storage services, as well as natural gas and NGL gathering, processing, transportation, fractionation, storage and marketing services in the United States. In addition, this segment exports liquefied petroleum gas to global markets. 2)Chemicals—Consists of our 50% equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.3)Refining—Refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels. At December 31, 2025, this segment included 10 refineries in the United States and Europe. 4)Marketing and Specialties—Purchases for resale and markets refined products, mainly in the United States and Europe. In addition, this segment includes the manufacturing and marketing of base oils and lubricants.5)Renewable Fuels—Processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery. In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, business transformation restructuring costs, our investment in NOVONIX, and various other corporate activities. Corporate assets include all cash, cash equivalents, income tax-related assets and enterprise information technology assets. Effective in the first quarter of 2026, activities associated with decommissioning and redeveloping at our idled Los Angeles Refinery will be included in Corporate and Other. See Note 4—Restructuring for additional information.Intersegment sales are at prices that we believe approximate market.Through our implementation of ASU No. 2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures,” we are including additional disclosures regarding significant segment expenses regularly provided to our chief operating decision maker (CODM), who is our Chief Executive Officer. The measure of segment profit or loss reviewed by our CODM is “income (loss) before income taxes.” The CODM uses segment income (loss) before income taxes to allocate resources to each segment predominantly in the annual budgeting and forecasting process.

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 financial 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 accrue 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 uncertain. See Note 25—Income Taxes for additional information about income-tax-related contingencies.Other than with respect to the legal matters described herein, 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 potentially 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.

Debt Short-term and long-term debt at December 31 was:Millions of DollarsDecember 31, 2025Phillips 66Phillips 66 CompanyPhillips 66 PartnersDCP LPTotal1.300% Senior Notes due February 2026100 — — — 100 3.550% Senior Notes due October 2026— 458 34 — 492 5.625% Senior Notes due July 2027— — — 500 500 4.950% Senior Notes due December 2027— 750 — — 750 3.750% Senior Notes due March 2028— 427 73 — 500 3.900% Senior Notes due March 2028800 — — — 800 5.125% Senior Notes due May 2029— — — 600 600 3.150% Senior Notes due December 2029— 570 30 — 600 8.125% Senior Notes due August 2030— — — 300 300 2.150% Senior Notes due December 2030 850 — — — 850 5.250% Senior Notes due June 2031— 1,200 — — 1,200 3.250% Senior Notes due February 2032— — — 400 400 5.300% Senior Notes due June 2033— 900 — — 900 4.650% Senior Notes due November 20341,000 — — — 1,000 4.950% Senior Notes due March 2035— 600 — — 600 6.450% Senior Notes due November 2036— — — 300 300 6.750% Senior Notes due September 2037— — — 450 450 5.875% Senior Notes due May 20421,500 — — — 1,500 5.600% Senior Notes due April 2044— — — 400 400 4.875% Senior Notes due November 20441,700 — — — 1,700 4.680% Senior Notes due February 2045— 442 8 — 450 4.900% Senior Notes due October 2046— 605 20 — 625 3.300% Senior Notes due March 20521,000 — — — 1,000 5.650% Senior Notes due June 2054— 500 — — 500 5.500% Senior Notes due March 2055— 600 — — 600 5.875% Series A Junior Subordinated Notes due March 2056— 1,000 — — 1,000 6.200% Series B Junior Subordinated Notes due March 2056— 1,000 — — 1,000 Commercial paper due January 2026 at 3.952% at year-end 2025200 — — — 200 Receivables Securitization Facility due September 2026 at 4.538% at year-end 2025200 — — — 200 Debt at face value7,350 9,052 165 2,950 19,517 Finance leases338 Software obligations34 Net unamortized discounts, debt issuance costs and acquisition fair value adjustments(173)Total debt19,716 Short-term debt(1,038)Long-term debt$18,678 Millions of DollarsDecember 31, 2024Phillips 66Phillips 66 CompanyPhillips 66 PartnersDCP LPTotal3.605% Senior Notes due February 2025— — 59 — 59 5.375% Senior Notes due July 2025— — — 525 525 1.300% Senior Notes due February 2026500 — — — 500 3.550% Senior Notes due October 2026— 458 34 — 492 5.625% Senior Notes due July 2027— — — 500 500 4.950% Senior Notes due December 2027— 750 — — 750 3.750% Senior Notes due March 2028— 427 73 — 500 3.900% Senior Notes due March 2028800 — — — 800 5.125% Senior Notes due May 2029— — — 600 600 3.

Income Taxes Components of income tax expense (benefit) were: Millions of Dollars 202520242023Income Tax Expense (Benefit)FederalCurrent$390 662 661 Deferred114 (282)830 ForeignCurrent261 78 394 Deferred57 95 (23)State and localCurrent63 11 335 Deferred7 (64)33 $892 500 2,230 On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA) that includes, among other provisions, changes to the U.S. corporate income tax system, including provisions that allow a company to purchase transferable tax credits. In 2024 and 2023, we executed agreements to purchase eligible tax credits for a total of $485 million and $262 million, respectively. In 2024 and 2023, we paid $551 million and $196 million to our counterparties, respectively. These tax credits were used to offset estimated tax payments in 2024 and 2023.Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Major components of deferred tax liabilities and assets at December 31 were: Millions of Dollars 20252024Deferred Tax LiabilitiesProperties, plants and equipment, and intangibles$3,743 3,493 Investment in joint ventures*1,094 1,864 Investment in subsidiaries**3,188 2,511 Other342 318 Total deferred tax liabilities8,367 8,186 Deferred Tax AssetsBenefit plan accruals296 355 Loss and credit carryforwards 209 162 Asset retirement obligations and accrued environmental costs422 299 Other financial accruals and deferrals72 91 Inventory8 82 Other246 299 Total deferred tax assets1,253 1,288 Less: valuation allowance160 137 Net deferred tax assets1,093 1,151 Net deferred tax liabilities$7,274 7,035 *2024 includes activity associated with our 50% equity interest in WRB.**Includes activity associated with our consolidated investments in Phillips 66 Partners and DCP LP. 2025 also includes activity associated with our consolidated investment in WRB, see Note 9—Investments, Loans and Long-Term Receivables for additional information.At December 31, 2025, the loss and credit carryforward deferred tax assets were primarily related to a foreign tax credit carryforward in the United States of $150 million; a state tax net operating loss carryforward of $49 million; and capital loss and net operating loss carryforwards in the United Kingdom of $10 million. State net operating loss carryforwards begin to expire in 2040.

Share-Based Compensation Plans Share-based payment awards, including stock options, Restricted Stock Unit (RSU) awards, and performance awards, are granted to our employees, nonemployee directors and other plan participants by the Human Resources and Compensation Committee (HRCC) of our Board of Directors under the applicable Omnibus Stock and Performance Incentive Plan of Phillips 66. Prior to May 11, 2022, share-based payment awards were granted under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2013 P66 Omnibus Plan). On May 11, 2022, Phillips 66’s shareholders approved the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2022 P66 Omnibus Plan), which replaced the 2013 P66 Omnibus Plan. No future awards will be made under the 2013 P66 Omnibus Plan. As of December 31, 2025, approximately 11 million shares of Phillips 66’s common stock remained available to be issued to settle share-based payment awards under the 2022 P66 Omnibus Plan.Total share-based compensation expense recognized in income and the associated income tax benefit for the years ended December 31 were: Millions of Dollars 202520242023Restricted stock units$115 121 130 Performance share units100 83 139 Stock options2 4 19 Other3 2 9 Total share-based compensation expense$220 210 297 Income tax benefit$(65)(84)(87)Restricted Stock Units Generally, RSUs are granted annually under the provisions of the applicable Phillips 66 incentive plan, and vest either ratably over three years following the grant date or cliff vest at the end of three years for awards granted in 2025, 2024 and 2023. For awards granted prior to 2023, RSUs cliff vest at the end of three years. The grant date fair value is equal to the average of the high and low market price of our stock on the grant date. The recipients receive a quarterly dividend equivalent cash payment until the RSU is settled by issuing one share of our common stock for each RSU at the end of the service period. For recipients outside of the United States and United Kingdom, expected dividend equivalents during the service period are reduced from the grant date fair value on the grant date. RSUs granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date. Special RSUs are granted to attract or retain key personnel and the terms and conditions may vary by award.

The following table summarizes our stock option activity from January 1, 2025, to December 31, 2025:OptionsWeighted-AverageExercise PriceOutstanding at January 1, 20254,056,466 $89.32 Granted— — Forfeited(3,301)97.80 Exercised(1,221,431)87.40 Outstanding at December 31, 20252,831,734 $90.11 Vested at December 31, 20252,769,822 $89.89 Exercisable at December 31, 20252,582,241 $89.

Leases We lease marine vessels, pipelines, storage tanks, railcars, service station sites, office buildings, corporate aircraft, land and other facilities and equipment. In determining whether an agreement contains a lease, we consider our ability to control the asset and whether third-party participation or vendor substitution rights limit our control. Certain leases include escalation clauses for adjusting rental payments to reflect changes in price indices, as well as renewal options and/or options to purchase the leased property. Renewal options have been included only when reasonably certain of exercise. There are no significant restrictions imposed on us in our lease agreements with regards to dividend payments, asset dispositions or borrowing ability. Certain leases have residual value guarantees, which may require additional payments at the end of the lease term if future fair values decline below contractual lease balances. We discount lease obligations using our incremental borrowing rate. We separate costs for lease and service components for contracts involving marine vessels, consignment service stations, and refining processing equipment. For these contracts, we allocate the consideration payable between the lease and service components using the relative standalone prices of each component. For contracts involving all other asset types, we account for the lease and service components on a combined basis. For short-term leases, which are leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that is reasonably certain to be exercised, we do not recognize the right-of-use (ROU) asset and corresponding lease liability on our consolidated balance sheet.

DCP Midstream, LLC and DCP Midstream, LP MergersDCP Midstream, LLC and Gray Oak Holdings LLC Merger (DCP Midstream Merger)On August 17, 2022, we and our co-venturer, Enbridge Inc. (Enbridge), agreed to merge DCP Midstream, LLC (DCP Midstream) and Gray Oak Holdings LLC (Gray Oak Holdings), with DCP Midstream as the surviving entity. Prior to the DCP Midstream Merger, we and Enbridge each held a 50% interest and jointly governed DCP Midstream, whose primary assets are its general partner and limited partner interests in DCP Midstream, LP (DCP LP), and we each held indirect economic interests in DCP LP of 28.26%. DCP LP is a VIE because its limited partners do not have the ability to remove its general partner with a simple majority vote, nor do its limited partners have substantive participating rights in the significant decisions made in the ordinary course of business. DCP Midstream ultimately consolidates DCP LP because one of its wholly owned subsidiaries is the primary beneficiary of DCP LP. We and Enbridge also held 65% and 35% interests, respectively, in Gray Oak Holdings, whose primary asset was a 65% noncontrolling interest in Gray Oak Pipeline, LLC (Gray Oak Pipeline). Our and Enbridge’s indirect economic interests in Gray Oak Pipeline were 42.25% and 22.75%, respectively. We had voting control over and consolidated Gray Oak Holdings and reported Gray Oak Holdings’ 65% interest in Gray Oak Pipeline as an equity investment and Enbridge’s interest in Gray Oak Holdings as a noncontrolling interest. In connection with the DCP Midstream Merger, we and Enbridge entered into a Third Amended and Restated Limited Liability Company Agreement of DCP Midstream (Amended and Restated LLC Agreement), which realigned the members’ economic interests and governance responsibilities. Under the Amended and Restated LLC Agreement, two classes of membership interests in DCP Midstream were created, Class A and Class B, that are intended to track the assets, liabilities, revenues and expenses of the following operating segments of DCP Midstream:•Class A Segment comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities (DCP Midstream Class A Segment).•Class B Segment comprised of the business, activities, assets and liabilities of Gray Oak Pipeline (DCP Midstream Class B Segment).We hold a 76.64% Class A membership interest, which represents an indirect economic interest in DCP LP of 43.