Discontinued Operations

6 Months Ended

Jun. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATIONS

In May 2014, we decided to abandon our Aruba Refinery, except for the associated crude oil and refined products terminal assets that we continue to operate. As a result of our decision, the refinery’s results of operations have been presented in this report as discontinued operations for the three and six months ended June 30, 2014 and 2013.

We had suspended operations of the refinery in 2012 and at that time we wrote off the entire carrying value of the refinery’s idled crude oil processing units and related infrastructure (refining assets) and supplies inventories that supported the refining operations. In addition, we terminated the employees who supported the refining operations and incurred severance costs at that time. Even though we suspended refining operations in 2012, we continued to maintain the refining assets to allow them to be restarted and did not abandon them until our recent decision to no longer pursue options to restart refining operations.

The Aruba Refinery resides on land leased from the Government of Aruba (GOA) and our agreements with the GOA require us to dismantle our leasehold improvements under certain conditions. Because of our May 2014 decision to abandon the refining assets, we believe the GOA will require us to dismantle those assets. As a result, we recognized an asset retirement obligation of $59 million, which was charged to expense during the three months ended June 30, 2014, and is reflected in discontinued operations. We had not recognized an asset retirement obligation previously due to our belief that we would not be required to dismantle the assets as long as we intended to operate them. In the second quarter of 2014, we also recognized liabilities of $4 million relating to obligations under certain contracts, including a liability for the remaining lease payments for the land on which the refining assets reside.

Of the $63 million of liabilities recorded in connection with our decision to abandon the Aruba Refinery, $30 million is classified as a current liability and is reflected in accrued expenses, and $33 million is classified as a long-term liability and is reflected in other long-term liabilities as of June 30, 2014. Our agreements with the GOA require us to complete the dismantlement activities within 3 years.

Selected results of operations of the Aruba Refinery are shown below (in millions).

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
Operating revenues	$	—		$	—	$	—		$	—
Income (loss) before income taxes	(63		)	3		(64		)	6

There was no tax benefit recognized for the loss from discontinued operations for the the three and six months ended June 30, 2014 as we do not expect to realize this tax benefit.