Percentage of Completion Contracts

6 Months Ended

Jun. 30, 2017

Contractors [Abstract]

Percentage of Completion Contracts

Percentage-of-Completion Contracts

We account for our long-term early production facility construction contracts in Iraq under the percentage-of-completion method. In the second quarter and the first six months of 2017, there was no change to our cumulative estimated loss from the Iraq contracts, which was $532 million as of June 30, 2017 and December 31, 2016. As of June 30, 2017, we have no claims revenue and our percentage-of-completion project estimate includes zero back charges. Our net billings in excess of costs as of June 30, 2017 were $46 million and are shown in the “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets.

On May 26, 2016, we entered into an agreement with our customer containing the terms and conditions of the settlement on the Zubair contract which included variation order requests, claims for extension of time, payments of remaining contract milestones and new project completion timelines that resulted in relief from the liquidated damages provisions. The settlement paid to us was a gross amount of $150 million, of which we received $62 million in the second quarter of 2016, $72 million in the third quarter of 2016 and $16 million in the first quarter of 2017.

In the second quarter of 2016, we recognized an estimated project income of $52 million for our Zubair contract, and in the first six months of 2016 we were break-even. Cumulative estimated losses on these projects were $532 million, project estimates includedno claims revenue, $25 million in newly approved change orders and $32 million of back charges at June 30, 2016.