v3.25.4
Leases
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Leases 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.

The following table indicates the consolidated balance sheet line items that include the ROU assets and lease liabilities for our finance and operating leases at December 31:

Millions of Dollars
20252024
Finance
Leases		Operating
Leases		Finance
Leases		Operating
Leases
Right-of-Use Assets
Prepaid expenses and other current assets$— — — 20 
Net properties, plants and equipment299 — 323 — 
Other assets— 1,807 — 1,300 
Total right-of-use assets$299 1,807 323 1,320 
Lease Liabilities
Short-term debt$34 — 30 — 
Other accruals— 574 — 421 
Long-term debt304 — 322 — 
Other liabilities and deferred credits— 1,296 — 934 
Total lease liabilities$338 1,870 352 1,355 
Future minimum lease payments at December 31, 2025, for finance and operating lease liabilities were:
 
Millions of Dollars
Finance
Leases		Operating
Leases
2026$49 657 
202741 506 
202840 378 
202937 281 
203034 158 
Remaining years255 110 
Future minimum lease payments456 2,090 
Amount representing interest or discounts(118)(220)
Total lease liabilities$338 1,870 


Our finance lease liabilities relate primarily to our marketing business, service station consignment agreements with a marketing joint venture, and a crude oil terminal in the United Kingdom. The lease liability for the terminal finance lease is subject to foreign currency translation adjustments each reporting period.

Components of net lease cost for the years ended December 31 were:

Millions of Dollars
202520242023
Finance lease cost
Amortization of right-of-use assets$33 33 30 
Interest on lease liabilities16 13 9 
Total finance lease cost49 46 39 
Operating lease cost597 478 390 
Short-term lease cost124 88 76 
Variable lease cost55 53 55 
Sublease income (28)(19)(12)
Total net lease cost$797 646 548 


Cash paid for amounts included in the measurement of our lease liabilities for the years ended December 31 was:

Millions of Dollars
202520242023
Operating cash outflows—finance leases$16 13 15 
Operating cash outflows—operating leases600 473 390 
Financing cash outflows—finance leases30 28 19 


During the years ended December 31, 2025, 2024 and 2023, we recorded noncash ROU assets and corresponding operating lease liabilities totaling $1,125 million, $547 million and $398 million, respectively, related to new and modified lease agreements, including leases acquired as part of the business combinations. See Note 5—Business Combinations for additional information.
The weighted-average remaining lease terms and discount rates for our lease liabilities at December 31 were:

20252024
Weighted-average remaining lease term—finance leases (years)12.213.0
Weighted-average remaining lease term—operating leases (years)4.24.9
Weighted-average discount rate—finance leases4.4 %4.4 
Weighted-average discount rate—operating leases5.2 4.8 
Leases 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.

The following table indicates the consolidated balance sheet line items that include the ROU assets and lease liabilities for our finance and operating leases at December 31:

Millions of Dollars
20252024
Finance
Leases		Operating
Leases		Finance
Leases		Operating
Leases
Right-of-Use Assets
Prepaid expenses and other current assets$— — — 20 
Net properties, plants and equipment299 — 323 — 
Other assets— 1,807 — 1,300 
Total right-of-use assets$299 1,807 323 1,320 
Lease Liabilities
Short-term debt$34 — 30 — 
Other accruals— 574 — 421 
Long-term debt304 — 322 — 
Other liabilities and deferred credits— 1,296 — 934 
Total lease liabilities$338 1,870 352 1,355 
Future minimum lease payments at December 31, 2025, for finance and operating lease liabilities were:
 
Millions of Dollars
Finance
Leases		Operating
Leases
2026$49 657 
202741 506 
202840 378 
202937 281 
203034 158 
Remaining years255 110 
Future minimum lease payments456 2,090 
Amount representing interest or discounts(118)(220)
Total lease liabilities$338 1,870 


Our finance lease liabilities relate primarily to our marketing business, service station consignment agreements with a marketing joint venture, and a crude oil terminal in the United Kingdom. The lease liability for the terminal finance lease is subject to foreign currency translation adjustments each reporting period.

Components of net lease cost for the years ended December 31 were:

Millions of Dollars
202520242023
Finance lease cost
Amortization of right-of-use assets$33 33 30 
Interest on lease liabilities16 13 9 
Total finance lease cost49 46 39 
Operating lease cost597 478 390 
Short-term lease cost124 88 76 
Variable lease cost55 53 55 
Sublease income (28)(19)(12)
Total net lease cost$797 646 548 


Cash paid for amounts included in the measurement of our lease liabilities for the years ended December 31 was:

Millions of Dollars
202520242023
Operating cash outflows—finance leases$16 13 15 
Operating cash outflows—operating leases600 473 390 
Financing cash outflows—finance leases30 28 19 


During the years ended December 31, 2025, 2024 and 2023, we recorded noncash ROU assets and corresponding operating lease liabilities totaling $1,125 million, $547 million and $398 million, respectively, related to new and modified lease agreements, including leases acquired as part of the business combinations. See Note 5—Business Combinations for additional information.
The weighted-average remaining lease terms and discount rates for our lease liabilities at December 31 were:

20252024
Weighted-average remaining lease term—finance leases (years)12.213.0
Weighted-average remaining lease term—operating leases (years)4.24.9
Weighted-average discount rate—finance leases4.4 %4.4 
Weighted-average discount rate—operating leases5.2 4.8