Asset Impairments

3 Months Ended

Mar. 31, 2015

5. Asset Impairments

In the first quarter of 2015, Devon recognized asset impairments as presented below.



	Three Months Ended March 31, 2015
	Gross		Net of Taxes

	(Millions)
U.S. oil and gas assets	$	5,458	$	3,466
Other assets		2		1
Total asset impairments	$	5,460	$	3,467

Oil and Gas Impairments

Under the full cost method of accounting, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the full cost “ceiling” at the end of each quarter. The ceiling is calculated separately for each country and is based on the present value of estimated future net cash flows from proved oil and gas reserves, discounted at 10% per annum, net of related tax effects. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months.

The oil and gas impairments resulted primarily from a decline in the U.S. full cost ceiling. The lower ceiling value resulted from decreases in the 12-month average trailing prices for oil, gas and NGLs, which reduced proved reserves and proved reserves values.

Other Impairments

Due to the significant decline in oil prices during the first quarter of 2015, Devon impaired its pipeline line fill inventory, as the carrying amount exceeded its estimated fair value, which was determined based on the WTI spot price.