Restructuring Charges

In 2015, due to the significant decline in the price of crude oil and our anticipation of a lower level of exploration and production spending in 2015, we initiated a plan to reduce our overall costs and workforce to better align with anticipated activity levels. This cost reduction plan (the “2015 Plan”) includes a workforce reduction and other cost reduction measures initiated across our geographic regions. During 2015, we increased the expected workforce reduction by 75% from the originally planned workforce reduction due to the continued weakness in the price and demand of crude oil, as well as lower than expected exploration and production spending in 2015.

In connection with the 2015 Plan, we recognized restructuring charges of $232 million in 2015 and $58 million in 2014. Our restructuring charges during 2015 in connection with the 2015 Plan include termination (severance) benefits of $149 million, restructuring related asset charges of $64 million and other restructuring charges of $19 million. Restructuring related asset charges include asset write-offs of $26 million related to Yemen due to the political disruption and $38 million in other regions. Other restructuring charges include exit costs, contract termination costs, relocation costs and other associated costs. Our restructuring charges during 2014 in connection with the 2015 Plan include termination (severance) benefits of $58 million.

In the first quarter of 2014, we announced a cost reduction plan (the “2014 Plan”), which included a worldwide workforce reduction and other cost reduction measures. In connection with the 2014 Plan, we recognized restructuring charges of $273 million in 2014. Our restructuring charges during 2014 in connection with the 2014 Plan include restructuring related asset charges of $135 million, termination (severance) benefits of $114 million, and other restructuring charges of $24 million, for a total of $273 million. Other restructuring charges include contract termination costs, relocation and other associated costs.

The impairments recognized in connection with the 2014 Plan primarily pertain to operations in our Middle East/North Africa (“MENA”) region, where geopolitical issues and recent disruptions in North Africa, primarily Libya, resulted in the decisions in the third quarter of 2014 to exit product lines in selected markets. The 2014 Plan activities resulted in $106 million of cash payments in 2014.

As of December 31, 2015, we completed our planned headcount reductions and closures of underperforming operating locations in connection with the 2014 and 2015 Plans. The following tables present the components of the restructuring charges by segment and plan for the years ended December 31, 2015 and 2014.



	Year Ended December 31, 2015
			Other		Total
(Dollars in millions)	Severance		Restructuring		Severance and
2015 Plan	Charges		Charges		Other Charges
North America	$	28	$	24	$	52
MENA/Asia Pacific	21		35		56
Europe/SSA/Russia	34		22		56
Latin America	38		2		40
Subtotal	121		83		204
Land Drilling Rigs	12		—		12
Corporate and Research and Development	16		—		16
Total	$	149	$	83	$	232



	Year Ended December 31, 2014
			Other		Total
	Severance		Restructuring		Severance and
(Dollars in millions)	Charges		Charges		Other Charges
2014 Plan:
North America	$	17	$	27	$	44
MENA/Asia Pacific	19		106		125
Europe/SSA/Russia	17		13		30
Latin America	29		7		36
Subtotal	82		153		235
Land Drilling Rigs	5		4		9
Corporate and Research and Development	27		2		29
2014 Plan Total	$	114	$	159	$	273
2015 Plan:
North America	$	32	$	—	32
MENA/Asia Pacific	8		—		8
Europe/SSA/Russia	5		—		5
Latin America	12		—		12
Subtotal	57		—		57
Land Drilling Rigs	—		—		—
Corporate and Research and Development	1		—		1
2015 Plan Total	$	58	$	—	$	58
Total	$	172	$	159	$	331

The severance and other restructuring charges gave rise to certain liabilities, the components of which are summarized below, and largely relate to the severance accrued as part of the 2014 Plan and 2015 Plan that will be paid pursuant to the respective arrangements and statutory requirements.



	At December 31, 2015
	2015 Plan				2014 Plan				Total Severance
			Other				Other		and Other
	Severance		Restructuring		Severance		Restructuring		Restructuring
(Dollars in millions)	Liability		Liability		Liability		Liability		Liability
North America	$	7	$	—	$	—	$	1	$	8
MENA/Asia Pacific	7		—		—		4		11
Europe/SSA/Russia	9		8		—		1		18
Latin America	1		—		—		—		1
Subtotal	24		8		—		6		38
Land Drilling Rigs	—		—		—		—		—
Corporate and Research and Development	8		—		5		—		13
Total	$	32	$	8	$	5	$	6	$	51

The following table presents the restructuring accrual activity for the year ended December 31, 2015.



			Year Ended December 31, 2015
(Dollars in millions)	Accrued Balance at December 31, 2014		Charges		Cash Payments			Other			Accrued Balance at December 31, 2015
2015 Plan:
Severance liability	$	53	$	149	$	(168	)	$	(2	)	$	32
Other restructuring liability	—		19		(12		)	1			8
2014 Plan:
Severance liability	14		—		(7		)	(2		)	5
Other restructuring liability	12		—		(6		)	—			6
Total severance and other restructuring liability	$	79	$	168	$	(193	)	$	(3	)	$	51