Discontinued Operations

12 Months Ended

Dec. 31, 2019

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

In first-quarter 2018, we sold our properties in the San Juan Basin’s Gallup oil play and we received approximately $667 million (subject to post-closing adjustments). In addition, the purchaser assumed approximately $309 million of annual gathering and processing commitments that conclude in 2026; however, WPX has left in place a performance guarantee with respect to these commitments. The current remaining commitment is approximately $277 million. We believed and continue to believe that any future performance under this guarantee obligation is highly unlikely given our understanding of the buyer’s credit position, the indemnity arrangement between the Company and the purchaser, and the declining size of the obligations subject to the guarantee over time. As part of the divestiture, we determined the fair value of the guarantee that was provided. We estimated the fair value of the guarantee to be approximately $9 million based on the factors mentioned above along with projections of estimated future volume throughputs and risk adjusted discount rates, all of which are Level 3 inputs. This amount is included in our calculation of the loss on sale. We recorded a total loss on the sale of $147 million in 2018.

In December 2017, we sold our natural gas-producing properties in the San Juan Basin for $169 million and recorded a gain of approximately $2 million. A portion of this sale closed in 2018.

Our discontinued operations consist of the previously owned properties in the San Juan Basin and accretion on certain transportation and gathering obligations retained and recognized in prior years related to the sale of Powder River properties. See Note 10 for additional information related to the Powder River liabilities.

Summarized Results of Discontinued Operations

The following table presents the results of discontinued operations for the years presented. For the year ended December 31, 2019, our discontinued operations activity was minimal and therefore not included in the table below.


	Years Ended December 31,
	2018		2017
	(Millions)
Total revenues	$	75	$	291
Costs and expenses:
Depreciation, depletion and amortization	$	8	$	131
Lease and facility operating	7		50
Gathering, processing and transportation	12		70
Taxes other than income	5		23
Exploration	3		14
General and administrative	1		8

Accrual for contract obligations retained	—		5
Net loss—sales of assets and impairments	—		50

Accretion of liabilities related to contract obligations retained	6		6
Other—net(a)	5		(3)
Total costs and expenses	47		354
Operating income (loss)	28		(63)



Loss on sales of assets	(148)		—

Loss from discontinued operations before income taxes	(120)		(63)
Benefit for income taxes	(29)		(23)
Loss from discontinued operations	$	(91)	$	(40)

__________

(a) Includes severance tax refund received in 2017.

Cash Flows Attributable to Discontinued Operations

In addition to the amounts presented below, cash outflows related to previous accruals for the Powder River Basin gathering and transportation contracts retained by WPX were $28 million, $47 million and $53 million for 2019, 2018 and 2017, respectively. During 2017, we received a $10 million severance tax refund for prior years related to our former Piceance Basin operations.


	Years Ended December 31,
		2018		2017
	(Millions)
Cash provided by operating activities(a)		$	44	$	143
Cash capital expenditures within investing activities		$	29	$	175

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(a) Excluding income taxes and changes to working capital.