Goodwill (Notes)

12 Months Ended

Dec. 31, 2019

As of December 31, 2019, our consolidated balance sheet included goodwill of $95 million. Goodwill is tested for impairment on an annual basis, or between annual tests when events or changes in circumstances indicate the fair value may have been reduced below its carrying value. Goodwill is tested for impairment at the reporting unit level. Our reporting units are the same as our reporting segments, of which only International includes goodwill. We first assess the qualitative factors in order to determine whether the fair value of our International reporting unit is more likely than not less than its carrying amount. Certain qualitative factors used in our evaluation include, among other things, the results of the most recent quantitative assessment of the goodwill impairment test, macroeconomic conditions; industry and market conditions (including commodity prices and cost factors); overall financial performance; and other relevant entity-specific events. If, after considering these events and circumstances we determined that it is more likely than not that the fair value of the International reporting unit is less than its carrying amount, a quantitative goodwill test is performed. The quantitative goodwill test is performed using a combination of market and income approaches. The market approach references observable inputs specific to us and our industry, such as the price of our common equity, our enterprise value, and valuation multiples of us and our peers from the investor analyst community. The income approach utilizes discounted cash flows, which are based on forecasted assumptions. Key assumptions to the income approach include future liquid hydrocarbon and natural gas pricing, estimated quantities of liquid hydrocarbons and natural gas proved and probable reserves, estimated timing of production, discount rates, future capital requirements, operating expenses and tax rates. The assumptions used in the income approach are consistent with those that management uses to make business decisions. This quantitative goodwill test would represent Level 3 fair value measurements.

During the second quarter of 2019, we performed our annual impairment test of goodwill using the qualitative assessment. Our qualitative assessment considered the significant excess fair value over carrying value in our most recent step 1 test (second quarter 2017) and noted a general improvement in the qualitative factors above. After assessing the totality of the qualitative factors which could have a positive or negative impact on goodwill, our assessment did not indicate that it is more likely than not that the fair value is less than its carrying value. As a result, we concluded that no impairment to goodwill was required for our International reporting unit.

As of December 31, 2019 and 2018 our International segment is the only reporting segment which includes goodwill. The table below displays the allocated beginning goodwill balance of our International segment along with changes in the carrying amount of goodwill for 2019 and 2018:



(In millions)	International
2018
Beginning balance, gross	$	115
Less: accumulated impairments	—
Beginning balance, net	115
Dispositions^(a)	(18		)
Impairment	—
Ending balance, net	$	97
2019
Beginning balance, gross	$	97
Less: accumulated impairments	—
Beginning balance, net	97
Dispositions	(2		)
Impairment	—
Ending balance, net	$	95

^(a)

Primarily related to the sale of our Libya subsidiary (see Note 5).