Restructuring and Transformation Charges

Due to the highly competitive nature of our business and the continuing losses we incurred over the last few years, we continue to reduce our overall cost structure and workforce to better align our business with current activity levels. The ongoing transformation plan, which began in 2018 and is expected to extend significantly beyond the originally planned year-end 2019 target (the “Transformation Plan”), includes a workforce reduction, organization restructure, facility consolidations and other cost reduction measures and efficiency initiatives across our geographic regions.

The cost reduction plan which began in 2016 and continued throughout 2017 (the “2016-17 and 2016 Plan”), included a workforce reduction and other cost reduction measures initiated across our geographic regions due to the ongoing low levels of exploration and production spending. This plan was initiated to reduce our overall cost structure and workforce to better align with current activity levels of exploration and production.

In connection with the Transformation Plan, we recognized restructuring and transformation charges of $20 million in the first quarter of 2019, which include severance charges of $2 million, other restructuring charges of $14 million and restructuring related asset charges of $4 million. In the first quarter of 2018 we recognized restructuring charges of $25 million, which included severance charges of $11 million and other restructuring charges of $14 million. Other restructuring charges in both periods included contract termination costs, relocation and other associated costs.

The following tables present the components of restructuring charges by segment for the first quarter of 2019 and 2018.



	Three Months Ended March 31, 2019
					Total
(Dollars in millions)	Severance		Other		Severance and
Transformation Plan	Charges		Charges		Other Charges
Western Hemisphere	$	1	$	4	$	5
Eastern Hemisphere	1		4		5
Corporate	—		10		10
Total	$	2	$	18	$	20



	Three Months Ended March 31, 2018
					Total
(Dollars in millions)	Severance		Other		Severance and
2016-17 Plan	Charges		Charges		Other Charges
Western Hemisphere	$	4	$	—	$	4
Eastern Hemisphere	4		5		9
Corporate	3		9		12
Total	$	11	$	14	$	25

The severance and other restructuring charges gave rise to certain liabilities, the components of which are summarized below, and largely relate to liabilities accrued as part of the 2016-17 and 2016 Plans that will be paid pursuant to the respective arrangements and statutory requirements.



	At March 31, 2019
	Transformation Plan				2016-17 and 2016 Plans				Total
									Severance
	Severance		Other		Severance		Other		and Other
(Dollars in millions)	Liability		Liability		Liability		Liability		Liability
Western Hemisphere	$	4	$	1	$	2	$	2	$	9
Eastern Hemisphere	6		—		1		2		9
Corporate	—		6		3		—		9
Total	$	10	$	7	$	6	$	4	$	27

The following table presents the restructuring liability activity for the first three months of 2019. In the first quarter of 2019, we reclassified $12 million of restructuring cease-use liability to the initial ROU asset in accordance with the adoption of Topic 842.



			Three Months Ended March 31, 2019
(Dollars in millions)	Accrued Balance at December 31, 2018		Charges		Cash Payments			Other			Accrued Balance at March 31, 2019
Transformation Plan
Severance liability	$	18	$	2	$	(10	)	$	—		$	10
Other restructuring liability	16		$	14	$	(22	)	$	(1	)	$	7

2016-17 and Prior Plans
Severance liability	6		—		(1		)	1			6
Other restructuring liability	19		—		(1		)	(14		)	4
Total severance and other restructuring liability	$	59	$	16	$	(34	)	$	(14	)	$	27