The company adopted the accounting prescribed by Emerging
Issues Task Force (EITF) Issue No. 04-13, Accounting for
Purchases and Sales of Inventory with the Same Counterparty
(Issue 04-13), on a prospective basis from April 1, 2006. Issue
04-13 requires that two or more legally separate exchange
transactions with the same counterparty, including buy/sell
transactions, be combined and considered as a single arrangement
for purposes of applying the provisions of Accounting
Principles Board Opinion No. 29, Accounting for Nonmonetary
Transactions, when the transactions are entered into "in
contemplation" of one another. In prior periods, the company
accounted for buy/sell transactions in the Consolidated Statement of Income as a monetary transaction — purchases
were reported as "Purchased crude oil and products"; sales
were reported as "Sales and other operating revenues."
With the company's adoption of Issue 04-13, buy/sell
transactions beginning in the second quarter 2006 are netted
against each other on the Consolidated Statement of Income,
with no effect on net income. The amount associated with buy/sell transactions in the first quarter 2006 is shown as a footnote
to the Consolidated Statement of Income.