(11)Segment Information

See Note 2(f) for a description of the Company’s determination of its reportable segments. Revenues from gathering and processing and water handling and treatment operations are primarily derived from intersegment transactions for services provided to the Company’s exploration and production operations. Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties.

Operating segments are evaluated based on their contribution to consolidated results, which is primarily determined by the respective operating income of each segment. General and administrative expenses are allocated to the gathering and processing and water handling and treatment segments based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes, and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales are transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2 to the condensed consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the three months ended September 30, 2016 and 2017 (in thousands):


	Exploration and production		Gathering and processing	Water handling and treatment	Marketing	Elimination of intersegment transactions	Consolidated total
Three months ended September 30, 2016:
Sales and revenues:
Third-party	$	1,016,458	2,745	224	97,076	—	1,116,503
Intersegment		3,990	75,319	72,187	—	(151,496)	—
Total	$	1,020,448	78,064	72,411	97,076	(151,496)	1,116,503

Operating expenses:
Lease operating	$	13,710	—	28,978	—	(28,834)	13,854
Gathering, compression, processing, and transportation		303,753	6,400	—	—	(75,238)	234,915
Depletion, depreciation, and amortization		172,735	18,540	7,838	—	—	199,113
General and administrative		44,637	10,282	3,033	—	(375)	57,577
Other		31,266	(1,708)	3,070	114,611	(3,527)	143,712
Total		566,101	33,514	42,919	114,611	(107,974)	649,171
Operating income (loss)	$	454,347	44,550	29,492	(17,535)	(43,522)	467,332
Equity in earnings of unconsolidated affiliates	$	—	1,543	—	—	—	1,543
Segment assets	$	12,966,493	1,669,667	562,995	33,114	(603,016)	14,629,253
Capital expenditures for segment assets	$	909,837	56,836	58,730	—	(43,343)	982,060


	Exploration and production		Gathering and processing	Water handling and treatment	Marketing	Elimination of intersegment transactions	Consolidated total
Three months ended September 30, 2017:
Sales and revenues:
Third-party	$	594,244	2,609	260	50,767	—	647,880
Intersegment		3,070	97,909	92,851	—	(193,830)	—
Total	$	597,314	100,518	93,111	50,767	(193,830)	647,880

Operating expenses:
Lease operating	$	24,060	—	51,569	—	(52,138)	23,491
Gathering, compression, processing, and transportation		369,538	10,468	—	—	(97,872)	282,134
Depletion, depreciation, and amortization		176,188	22,027	8,753	—	—	206,968
General and administrative		48,289	9,336	4,980	—	(402)	62,203
Other		65,259	92	3,457	78,884	(2,556)	145,136
Total		683,334	41,923	68,759	78,884	(152,968)	719,932
Operating income (loss)	$	(86,020)	58,595	24,352	(28,117)	(40,862)	(72,052)
Equity in earnings of unconsolidated affiliates	$	—	7,033	—	—	—	7,033
Segment assets	$	12,751,606	2,158,107	752,982	15,807	(829,288)	14,849,214
Capital expenditures for segment assets	$	415,088	99,254	48,019	—	(40,704)	521,657

The operating results and assets of the Company’s reportable segments were as follows for the nine months ended September 30, 2016 and 2017 (in thousands):


	Exploration and production		Gathering and processing	Water handling and treatment	Marketing	Elimination of intersegment transactions	Consolidated total
Nine months ended September 30, 2016:
Sales and revenues:
Third-party	$	1,291,008	9,463	644	287,194	—	1,588,309
Intersegment		11,714	210,144	203,106	—	(424,964)	—
Total	$	1,302,722	219,607	203,750	287,194	(424,964)	1,588,309

Operating expenses:
Lease operating	$	37,299	—	104,009	—	(104,118)	37,190
Gathering, compression, processing, and transportation		838,936	20,567	—	—	(209,790)	649,713
Depletion, depreciation, and amortization		513,302	52,780	21,975	—	—	588,057
General and administrative		135,356	29,755	9,957	—	(1,102)	173,966
Other		104,279	(809)	11,568	378,521	(10,384)	483,175
Total		1,629,172	102,293	147,509	378,521	(325,394)	1,932,101
Operating income (loss)	$	(326,450)	117,314	56,241	(91,327)	(99,570)	(343,792)
Equity in earnings of unconsolidated affiliates	$	—	2,027	—	—	—	2,027
Segment assets	$	12,966,493	1,669,667	562,995	33,114	(603,016)	14,629,253
Capital expenditures for segment assets	$	1,734,914	154,136	137,355	—	(98,955)	1,927,450


	Exploration and production		Gathering and processing	Water handling and treatment	Marketing	Elimination of intersegment transactions	Consolidated total
Nine months ended September 30, 2017:
Sales and revenues:
Third-party	$	2,458,524	7,472	1,193	166,659	—	2,633,848
Intersegment		11,421	283,467	270,033	—	(564,921)	—
Total	$	2,469,945	290,939	271,226	166,659	(564,921)	2,633,848

Operating expenses:
Lease operating	$	56,991	—	131,635	—	(132,592)	56,034
Gathering, compression, processing, and transportation		1,070,522	28,492	—	—	(283,304)	815,710
Depletion, depreciation, and amortization		521,603	64,445	24,831	—	—	610,879
General and administrative		148,876	30,179	13,383	—	(1,438)	191,000
Other		158,128	104	12,333	246,298	(9,672)	407,191
Total		1,956,120	123,220	182,182	246,298	(427,006)	2,080,814
Operating income (loss)	$	513,825	167,719	89,044	(79,639)	(137,915)	553,034
Equity in earnings of unconsolidated affiliates	$	—	12,887	—	—	—	12,887
Segment assets	$	12,751,606	2,158,107	752,982	15,807	(829,288)	14,849,214
Capital expenditures for segment assets	$	1,456,870	254,619	143,470	—	(137,420)	1,717,539