Delaware (State or other jurisdiction of incorporation or organization) | 46-5670947 (I.R.S. Employer Identification No.) | |
27200 Tourney Road, Suite 315 Santa Clarita, California (Address of principal executive offices) | 91355 (Zip Code) |
Large Accelerated Filer | o | Accelerated Filer | þ | Non-Accelerated Filer | o |
Smaller Reporting Company | o | Emerging Growth Company | o |
Shares of common stock outstanding as of September 30, 2018 | 48,565,905 |
Page | ||
Part I | ||
Item 1 | Financial Statements (unaudited) | |
Condensed Consolidated Balance Sheets | ||
Condensed Consolidated Statements of Operations | ||
Condensed Consolidated Statements of Comprehensive Income | ||
Condensed Consolidated Statements of Cash Flows | ||
Condensed Consolidated Statements of Equity | ||
Notes to the Condensed Consolidated Financial Statements | ||
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
General | ||
Business Environment and Industry Outlook | ||
Seasonality | ||
Joint Ventures | ||
Acquisitions and Divestitures | ||
Operations | ||
Fixed and Variable Costs | ||
Production and Prices | ||
Balance Sheet Analysis | ||
Statements of Operations Analysis | ||
Liquidity and Capital Resources | ||
2018 Capital Program | ||
Lawsuits, Claims, Contingencies and Commitments | ||
Significant Accounting and Disclosure Changes | ||
Safe Harbor Statement Regarding Outlook and Forward-Looking Information | ||
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4 | Controls and Procedures | |
Part II | ||
Item 1 | Legal Proceedings | |
Item 1A | Risk Factors | |
Item 5 | Other Disclosures | |
Item 6 | Exhibits |
Item 1. | Financial Statements (unaudited) |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
CURRENT ASSETS | |||||||
Cash | $ | 31 | $ | 20 | |||
Trade receivables | 293 | 277 | |||||
Inventories | 69 | 56 | |||||
Other current assets, net | 153 | 130 | |||||
Total current assets | 546 | 483 | |||||
PROPERTY, PLANT AND EQUIPMENT | 22,323 | 21,260 | |||||
Accumulated depreciation, depletion and amortization | (15,937 | ) | (15,564 | ) | |||
Total property, plant and equipment, net | 6,386 | 5,696 | |||||
OTHER ASSETS | 52 | 28 | |||||
TOTAL ASSETS | $ | 6,984 | $ | 6,207 |
CURRENT LIABILITIES | |||||||
Accounts payable | 349 | 257 | |||||
Accrued liabilities | 522 | 475 | |||||
Total current liabilities | 871 | 732 | |||||
LONG-TERM DEBT | 5,108 | 5,306 | |||||
DEFERRED GAIN AND ISSUANCE COSTS, NET | 253 | 287 | |||||
OTHER LONG-TERM LIABILITIES | 612 | 602 | |||||
MEZZANINE EQUITY | |||||||
Redeemable noncontrolling interest | 745 | — | |||||
EQUITY | |||||||
Preferred stock (20 million shares authorized at $0.01 par value) no shares outstanding at September 30, 2018 and December 31, 2017 | — | — | |||||
Common stock (200 million shares authorized at $0.01 par value) outstanding shares (September 30, 2018 - 48,565,905 and December 31, 2017 - 42,901,946) | — | — | |||||
Additional paid-in capital | 4,983 | 4,879 | |||||
Accumulated deficit | (5,688 | ) | (5,670 | ) | |||
Accumulated other comprehensive loss | (20 | ) | (23 | ) | |||
Total equity attributable to common stock | (725 | ) | (814 | ) | |||
Noncontrolling interests | 120 | 94 | |||||
Total equity | (605 | ) | (720 | ) | |||
TOTAL LIABILITIES AND EQUITY | $ | 6,984 | $ | 6,207 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
REVENUES AND OTHER | |||||||||||||||
Oil and gas sales | $ | 700 | $ | 461 | $ | 1,932 | $ | 1,387 | |||||||
Net derivative (loss) gain from commodity contracts | (54 | ) | (65 | ) | (259 | ) | 51 | ||||||||
Other revenue | 182 | 49 | 313 | 113 | |||||||||||
Total revenues and other | 828 | 445 | 1,986 | 1,551 | |||||||||||
COSTS AND OTHER | |||||||||||||||
Production costs | 236 | 222 | 679 | 649 | |||||||||||
General and administrative expenses | 81 | 61 | 234 | 183 | |||||||||||
Depreciation, depletion and amortization | 128 | 134 | 372 | 412 | |||||||||||
Taxes other than on income | 45 | 39 | 120 | 103 | |||||||||||
Exploration expense | 4 | 5 | 18 | 17 | |||||||||||
Other expenses, net | 149 | 29 | 259 | 76 | |||||||||||
Total costs and other | 643 | 490 | 1,682 | 1,440 | |||||||||||
OPERATING INCOME (LOSS) | 185 | (45 | ) | 304 | 111 | ||||||||||
NON-OPERATING (LOSS) INCOME | |||||||||||||||
Interest and debt expense, net | (95 | ) | (85 | ) | (281 | ) | (252 | ) | |||||||
Net gain on early extinguishment of debt | 2 | — | 26 | 4 | |||||||||||
Gain on asset divestitures | 3 | — | 4 | 21 | |||||||||||
Other non-operating expenses | (4 | ) | (2 | ) | (16 | ) | (11 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | 91 | (132 | ) | 37 | (127 | ) | |||||||||
Income tax | — | — | — | — | |||||||||||
NET INCOME (LOSS) | 91 | (132 | ) | 37 | (127 | ) | |||||||||
Net income attributable to noncontrolling interests | (25 | ) | (1 | ) | (55 | ) | (1 | ) | |||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | 66 | $ | (133 | ) | $ | (18 | ) | $ | (128 | ) | ||||
Net income (loss) attributable to common stock per share | |||||||||||||||
Basic | $ | 1.34 | $ | (3.11 | ) | $ | (0.38 | ) | $ | (3.01 | ) | ||||
Diluted | $ | 1.32 | $ | (3.11 | ) | $ | (0.38 | ) | $ | (3.01 | ) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) | $ | 91 | $ | (132 | ) | $ | 37 | $ | (127 | ) | |||||
Other comprehensive income items: | |||||||||||||||
Reclassification of realized losses on pension and postretirement benefits to income(a) | — | 1 | 3 | 4 | |||||||||||
Total other comprehensive income | — | 1 | 3 | 4 | |||||||||||
Comprehensive income attributable to noncontrolling interests | (25 | ) | (1 | ) | $ | (55 | ) | $ | (1 | ) | |||||
Comprehensive income (loss) attributable to common stock | $ | 66 | $ | (132 | ) | $ | (15 | ) | $ | (124 | ) |
(a) | No associated tax for the three and nine months ended September 30, 2018 and 2017. See Note 11 Pension and Postretirement Benefit Plans for additional information. |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
CASH FLOW FROM OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | 37 | $ | (127 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation, depletion and amortization | 372 | 412 | |||||
Net derivative loss (gain) from commodity contracts | 259 | (51 | ) | ||||
Net (payments) proceeds on settled commodity derivatives | (178 | ) | 15 | ||||
Net gain on early extinguishment of debt | (26 | ) | (4 | ) | |||
Amortization of deferred gain | (58 | ) | (55 | ) | |||
Gain on asset divestitures | (4 | ) | (21 | ) | |||
Other non-cash charges to income, net | 78 | 46 | |||||
Dry hole expenses | 4 | 1 | |||||
Changes in operating assets and liabilities, net | (91 | ) | 9 | ||||
Net cash provided by operating activities | 393 | 225 | |||||
CASH FLOW FROM INVESTING ACTIVITIES | |||||||
Capital investments | (504 | ) | (232 | ) | |||
Changes in capital investment accruals | 40 | 26 | |||||
Asset divestitures | 17 | 33 | |||||
Acquisitions | (514 | ) | — | ||||
Other | (4 | ) | (1 | ) | |||
Net cash used in investing activities | (965 | ) | (174 | ) | |||
CASH FLOW FROM FINANCING ACTIVITIES | |||||||
Proceeds from 2014 Revolving Credit Facility | 1,822 | 1,000 | |||||
Repayments of 2014 Revolving Credit Facility | (1,843 | ) | (1,010 | ) | |||
Payments on 2014 Term Loan | — | (91 | ) | ||||
Debt repurchases | (149 | ) | (24 | ) | |||
Debt transaction costs | (4 | ) | (2 | ) | |||
Contributions from noncontrolling interest holders, net | 796 | 98 | |||||
Distributions paid to noncontrolling interest holders | (80 | ) | (6 | ) | |||
Issuance of common stock | 52 | 2 | |||||
Shares canceled for taxes | (11 | ) | (2 | ) | |||
Net cash provided (used) by financing activities | 583 | (35 | ) | ||||
Increase in cash | 11 | 16 | |||||
Cash—beginning of period | 20 | 12 | |||||
Cash—end of period | $ | 31 | $ | 28 |
Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Equity Attributable to Common Stock | Equity Attributable to Noncontrolling Interest | Total Equity | ||||||||||||||||||
Balance, December 31, 2016 | $ | 4,861 | $ | (5,404 | ) | $ | (14 | ) | $ | (557 | ) | $ | — | $ | (557 | ) | |||||||
Net (loss) income | — | (128 | ) | — | (128 | ) | 1 | (127 | ) | ||||||||||||||
Contribution from noncontrolling interest holders, net | — | — | — | — | 98 | 98 | |||||||||||||||||
Distributions paid to noncontrolling interest holders | — | — | — | — | (6 | ) | (6 | ) | |||||||||||||||
Other comprehensive income | — | — | 4 | 4 | — | 4 | |||||||||||||||||
Share-based compensation, net | 14 | — | — | 14 | — | 14 | |||||||||||||||||
Balance, September 30, 2017 | $ | 4,875 | $ | (5,532 | ) | $ | (10 | ) | $ | (667 | ) | $ | 93 | $ | (574 | ) |
Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Equity Attributable to Common Stock | Equity Attributable to Noncontrolling Interest | Total Equity(a) | ||||||||||||||||||
Balance, December 31, 2017 | $ | 4,879 | $ | (5,670 | ) | $ | (23 | ) | $ | (814 | ) | $ | 94 | $ | (720 | ) | |||||||
Net loss | — | (18 | ) | — | (18 | ) | (16 | ) | (34 | ) | |||||||||||||
Contribution from noncontrolling interest holders, net | — | — | — | — | 82 | 82 | |||||||||||||||||
Distributions paid to noncontrolling interest holders | — | — | — | — | (40 | ) | (40 | ) | |||||||||||||||
Issuance of common stock(b) | 101 | — | — | 101 | — | 101 | |||||||||||||||||
Other comprehensive income | — | — | 3 | 3 | — | 3 | |||||||||||||||||
Share-based compensation, net | 3 | — | — | 3 | — | 3 | |||||||||||||||||
Balance, September 30, 2018 | $ | 4,983 | $ | (5,688 | ) | $ | (20 | ) | $ | (725 | ) | $ | 120 | $ | (605 | ) |
(a) | Excludes redeemable noncontrolling interest recorded in mezzanine equity. See Note 6 Joint Ventures for more information. |
(b) | Includes 2.85 million shares of common stock (valued at $51 million at issuance) issued to Chevron in connection with our acquisition of Chevron's working interest in Elk Hills unit and 2.3 million shares of common stock (valued at $50 million at issuance) issued to an Ares-led investor group in connection with the formation of our Ares JV. See Note 7 Acquisitions and Divestitures for more information. |
NOTE 2 | ACCOUNTING AND DISCLOSURE CHANGES |
NOTE 3 | OTHER INFORMATION |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Amounts due from joint interest partners | $ | 87 | $ | 76 | |||
Derivative assets from commodities contracts | 34 | 23 | |||||
Prepaid expenses | 23 | 19 | |||||
Asset held for sale | — | 12 | |||||
Other | 9 | — | |||||
Other current assets, net | $ | 153 | $ | 130 |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Derivative liabilities from commodities contracts | $ | 191 | $ | 154 | |||
Accrued taxes other than on income | 65 | 130 | |||||
Accrued employee-related costs | 106 | 86 | |||||
Accrued interest | 60 | 23 | |||||
Other | 100 | 82 | |||||
Accrued liabilities | $ | 522 | $ | 475 |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Materials and supplies | $ | 64 | $ | 53 | |||
Finished goods | 5 | 3 | |||||
Total | $ | 69 | $ | 56 |
Outstanding Principal (in millions) | Interest Rate | Maturity | Security | ||||||||||
September 30, 2018 | December 31, 2017 | ||||||||||||
Credit Agreements | |||||||||||||
2014 Revolving Credit Facility | $ | 342 | $ | 363 | LIBOR plus 3.25%-4.00% ABR plus 2.25%-3.00% | June 30, 2021 | Shared First-Priority Lien | ||||||
2017 Credit Agreement | 1,300 | 1,300 | LIBOR plus 4.75% ABR plus 3.75% | December 31, 2022(a) | Shared First-Priority Lien | ||||||||
2016 Credit Agreement | 1,000 | 1,000 | LIBOR plus 10.375% ABR plus 9.375% | December 31, 2021 | First-Priority Lien | ||||||||
Second Lien Notes | |||||||||||||
Second Lien Notes | 2,122 | 2,250 | 8% | December 15, 2022(b) | Second-Priority Lien | ||||||||
Senior Notes | |||||||||||||
5% Senior Notes due 2020 | 100 | 100 | 5% | January 15, 2020 | Unsecured | ||||||||
5½% Senior Notes due 2021 | 100 | 100 | 5.5% | September 15, 2021 | Unsecured | ||||||||
6% Senior Notes due 2024 | 144 | 193 | 6% | November 15, 2024 | Unsecured | ||||||||
Total | $ | 5,108 | $ | 5,306 |
(a) | The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million in principal of the 2016 Credit Agreement is outstanding at that time. |
(b) | The Second Lien Notes require principal repayments of approximately $335 million in June 2021, $67 million in December 2021 and $70 million in June 2022. |
• | permit us to draw on our revolver to repurchase our Second Lien Notes and Senior Notes at a discount to par in an amount up to $300 million; |
• | permit us to draw on our revolver to repurchase our Second Lien Notes and Senior Notes at a discount to par, without regard to time limit, in an amount not to exceed a specified portion of proceeds from future dispositions of certain assets; |
• | in connection with any repurchase of certain of our indebtedness, increase the minimum liquidity required to make such repurchase (calculated on a pro forma basis after giving effect to the repurchase) from $250 million to $300 million; and |
• | enhance our ability to refinance our outstanding term loans under our 2017 Credit Agreement and 2016 Credit Agreement, Second Lien Notes and Senior Notes, in each case by allowing the use of permitted refinancing indebtedness for such refinancing so long as certain conditions are met. |
• | permit us to repurchase our Second Lien Notes and Senior Notes at a discount to par, without regard to time limit, in an amount not to exceed a specified portion of proceeds from dispositions of certain assets; and |
• | enhance our ability to refinance our outstanding Second Lien Notes, Senior Notes and 2016 Credit Agreement, in each case by allowing the use of permitted refinancing indebtedness for such refinancing so long as certain conditions are met. |
NOTE 6 | JOINT VENTURES |
Equity Attributable to Noncontrolling Interest | Mezzanine Equity - Redeemable Noncontrolling Interest | ||||||||||||||
Ares JV | BSP JV | Total | Ares JV | ||||||||||||
Balance, December 31, 2017 | $ | — | $ | 94 | $ | 94 | $ | — | |||||||
Net (loss) income attributable to noncontrolling interests | (8 | ) | (8 | ) | (16 | ) | 71 | ||||||||
Contributions from noncontrolling interest holders, net | 33 | 49 | 82 | 714 | |||||||||||
Distributions to noncontrolling interest holders | (5 | ) | (35 | ) | (40 | ) | (40 | ) | |||||||
Balance, September 30, 2018 | $ | 20 | $ | 100 | $ | 120 | $ | 745 |
Consideration: | |||
Cash | $ | 462 | |
Purchase price adjustments | (2 | ) | |
Common stock issued (2.85 million shares) | 51 | ||
Liabilities assumed | 7 | ||
$ | 518 | ||
Identifiable assets acquired: | |||
Proved properties | $ | 435 | |
Other property and equipment | 77 | ||
Materials and supplies | 6 | ||
$ | 518 |
Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | |||||||||||||||
Sold Calls: | |||||||||||||||||||
Barrels per day | 15,000 | 15,000 | 5,000 | — | — | ||||||||||||||
Weighted-average price per barrel | $ | 58.83 | $ | 66.15 | $ | 68.45 | $ | — | $ | — | |||||||||
Purchased Calls: | |||||||||||||||||||
Barrels per day | — | 2,000 | — | — | — | ||||||||||||||
Weighted-average price per barrel | $ | — | $ | 71.00 | $ | — | $ | — | $ | — | |||||||||
Purchased Puts: | |||||||||||||||||||
Barrels per day | — | 33,000 | 35,000 | 30,000 | 20,000 | ||||||||||||||
Weighted-average price per barrel | $ | — | $ | 63.48 | $ | 68.29 | $ | 71.67 | $ | 75.00 | |||||||||
Sold Puts: | |||||||||||||||||||
Barrels per day | 19,000 | 35,000 | 30,000 | 30,000 | 20,000 | ||||||||||||||
Weighted-average price per barrel | $ | 45.00 | $ | 50.71 | $ | 55.00 | $ | 56.67 | $ | 60.00 | |||||||||
Swaps: | |||||||||||||||||||
Barrels per day | 48,000 | 7,000(1) | — | — | — | ||||||||||||||
Weighted-average price per barrel | $ | 60.35 | $ | 67.71 | $ | — | $ | — | $ | — |
Note: | Additional hedges for 2019 and 2020 were put in place after September 30, 2018 that are not included in the table above. |
(1) | Certain of our counterparties have options to increase swap volumes by up to 5,000 barrels per day at a weighted-average Brent price of $70.00 for the first quarter of 2019. |
• | Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel. |
• | Purchased calls – we receive settlement payments for prices above the indicated weighted-average price per barrel. |
• | Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel. |
• | Sold puts – we make settlement payments for prices below the indicated weighted-average price per barrel. |
September 30, 2018 | ||||||||||||
Balance Sheet Classification | Gross Amounts Recognized at Fair Value | Gross Amounts Offset in the Balance Sheet | Net Fair Value Presented in the Balance Sheet | |||||||||
Assets: | ||||||||||||
Other current assets | $ | 34 | $ | — | $ | 34 | ||||||
Other assets | 13 | — | 13 | |||||||||
Liabilities: | ||||||||||||
Accrued liabilities | (191 | ) | — | (191 | ) | |||||||
Other long-term liabilities | (9 | ) | — | (9 | ) | |||||||
Total derivatives | $ | (153 | ) | $ | — | $ | (153 | ) |
December 31, 2017 | ||||||||||||
Balance Sheet Classification | Gross Amounts Recognized at Fair Value | Gross Amounts Offset in the Balance Sheet | Net Fair Value Presented in the Balance Sheet | |||||||||
Assets: | ||||||||||||
Other current assets | $ | 39 | $ | (16 | ) | $ | 23 | |||||
Other assets | 1 | — | 1 | |||||||||
Liabilities: | ||||||||||||
Accrued liabilities | (170 | ) | 16 | (154 | ) | |||||||
Other long-term liabilities | (3 | ) | — | (3 | ) | |||||||
Total derivatives | $ | (133 | ) | $ | — | $ | (133 | ) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions, except per-share amounts) | |||||||||||||||
Net income (loss) | $ | 91 | $ | (132 | ) | $ | 37 | $ | (127 | ) | |||||
Net income attributable to noncontrolling interest | (25 | ) | (1 | ) | (55 | ) | (1 | ) | |||||||
Net income (loss) attributable to common stock | 66 | (133 | ) | (18 | ) | (128 | ) | ||||||||
Less: net income allocated to participating securities | (1 | ) | — | — | — | ||||||||||
Net income (loss) available to common stockholders | $ | 65 | $ | (133 | ) | $ | (18 | ) | $ | (128 | ) | ||||
Weighted-average common shares outstanding - basic | 48.5 | 42.7 | 47 | 42.5 | |||||||||||
Basic EPS | $ | 1.34 | $ | (3.11 | ) | $ | (0.38 | ) | $ | (3.01 | ) | ||||
Net income (loss) | $ | 91 | $ | (132 | ) | $ | 37 | $ | (127 | ) | |||||
Net income attributable to noncontrolling interest | (25 | ) | (1 | ) | (55 | ) | (1 | ) | |||||||
Net income (loss) attributable to common stock | 66 | (133 | ) | (18 | ) | (128 | ) | ||||||||
Less: net income allocated to participating securities | (1 | ) | — | — | — | ||||||||||
Net income (loss) available to common stockholders | $ | 65 | $ | (133 | ) | $ | (18 | ) | $ | (128 | ) | ||||
Weighted-average common shares outstanding - basic | 48.5 | 42.7 | 47 | 42.5 | |||||||||||
Dilutive effect of potentially dilutive securities | 0.6 | — | — | — | |||||||||||
Weighted-average common shares outstanding - diluted | 49.1 | 42.7 | 47 | 42.5 | |||||||||||
Diluted EPS | $ | 1.32 | $ | (3.11 | ) | $ | (0.38 | ) | $ | (3.01 | ) | ||||
Weighted-average anti-dilutive shares(a) | 1.1 | 2.5 | 2.8 | 2.6 |
Three months ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Pension Benefit | Postretirement Benefit | Pension Benefit | Postretirement Benefit | ||||||||||||
(in millions) | |||||||||||||||
Service cost | $ | — | $ | 1 | $ | — | $ | 1 | |||||||
Interest cost | — | 1 | 1 | 1 | |||||||||||
Expected return on plan assets | (1 | ) | — | (1 | ) | — | |||||||||
Recognized actuarial loss | 1 | — | — | — | |||||||||||
Settlement loss | — | — | 1 | — | |||||||||||
Total | $ | — | $ | 2 | $ | 1 | $ | 2 |
Nine months ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Pension Benefit | Postretirement Benefit | Pension Benefit | Postretirement Benefit | ||||||||||||
(in millions) | |||||||||||||||
Service cost | $ | 1 | $ | 3 | $ | 1 | $ | 3 | |||||||
Interest cost | 1 | 3 | 2 | 3 | |||||||||||
Expected return on plan assets | (2 | ) | — | (2 | ) | — | |||||||||
Recognized actuarial loss | 1 | — | 1 | — | |||||||||||
Settlement loss | 4 | — | 4 | — | |||||||||||
Total | $ | 5 | $ | 6 | $ | 6 | $ | 6 |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | ||||||
Oil and gas sales: | |||||||
Oil | $ | 568 | $ | 1,587 | |||
NGLs | 71 | 195 | |||||
Natural gas | 61 | 150 | |||||
700 | 1,932 | ||||||
Other revenue: | |||||||
Electricity | 42 | 87 | |||||
Marketing, trading and other | 140 | 225 | |||||
Interest income | — | 1 | |||||
182 | 313 | ||||||
Net derivative loss from commodity contracts | (54 | ) | (259 | ) | |||
Total revenues and other | $ | 828 | $ | 1,986 |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | ||||||||||||||||||||||
As Reported ASC 606 | Previous GAAP | Change | As Reported ASC 606 | Previous GAAP | Change | ||||||||||||||||||
REVENUES AND OTHER | |||||||||||||||||||||||
Oil and gas sales | $ | 700 | $ | 695 | $ | 5 | $ | 1,932 | $ | 1,915 | $ | 17 | |||||||||||
Net derivative loss from commodity contracts | (54 | ) | (54 | ) | — | (259 | ) | (259 | ) | — | |||||||||||||
Other revenue | 182 | 177 | 5 | 313 | 242 | 71 | |||||||||||||||||
Total revenues and other | 828 | 818 | 10 | 1,986 | 1,898 | 88 | |||||||||||||||||
COSTS AND OTHER | |||||||||||||||||||||||
Production costs | 236 | 236 | — | 679 | 679 | — | |||||||||||||||||
General and administrative expenses | 81 | 81 | — | 234 | 234 | — | |||||||||||||||||
Depreciation, depletion and amortization | 128 | 128 | — | 372 | 372 | — | |||||||||||||||||
Taxes other than on income | 45 | 45 | — | 120 | 120 | — | |||||||||||||||||
Exploration expenses | 4 | 4 | — | 18 | 18 | — | |||||||||||||||||
Other expenses, net | 149 | 139 | 10 | 259 | 171 | 88 | |||||||||||||||||
Total costs and other | 643 | 633 | 10 | 1,682 | 1,594 | 88 | |||||||||||||||||
OPERATING INCOME | 185 | 185 | — | 304 | 304 | — | |||||||||||||||||
NON-OPERATING (LOSS) INCOME | |||||||||||||||||||||||
Interest and debt expense, net | (95 | ) | (95 | ) | — | (281 | ) | (281 | ) | — | |||||||||||||
Net gain on early extinguishment of debt | 2 | 2 | — | 26 | 26 | — | |||||||||||||||||
Gain on asset divestitures | 3 | 3 | — | 4 | 4 | — | |||||||||||||||||
Other non-operating expenses | (4 | ) | (4 | ) | — | (16 | ) | (16 | ) | — | |||||||||||||
INCOME BEFORE INCOME TAXES | 91 | 91 | — | 37 | 37 | — | |||||||||||||||||
Income tax | — | — | — | — | — | — | |||||||||||||||||
NET INCOME | 91 | 91 | — | 37 | 37 | — | |||||||||||||||||
Net income attributable to noncontrolling interests | (25 | ) | (25 | ) | — | (55 | ) | (55 | ) | — | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | 66 | $ | 66 | $ | — | $ | (18 | ) | $ | (18 | ) | $ | — |
Condensed Consolidating Balance Sheets | |||||||||||||||||||
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
As of September 30, 2018 | (in millions) | ||||||||||||||||||
Total current assets | $ | 5 | $ | 475 | $ | 81 | $ | (15 | ) | $ | 546 | ||||||||
Total property, plant and equipment, net | 32 | 5,823 | 531 | — | 6,386 | ||||||||||||||
Investments in consolidated subsidiaries | 5,858 | 178 | — | (6,036 | ) | — | |||||||||||||
Other assets | 10 | 29 | 13 | — | 52 | ||||||||||||||
TOTAL ASSETS | $ | 5,905 | $ | 6,505 | $ | 625 | $ | (6,051 | ) | $ | 6,984 | ||||||||
Total current liabilities | 187 | 682 | 17 | (15 | ) | 871 | |||||||||||||
Long-term debt | 5,108 | — | — | — | 5,108 | ||||||||||||||
Deferred gain and issuance costs, net | 253 | — | — | — | 253 | ||||||||||||||
Other long-term liabilities | 152 | 451 | 9 | — | 612 | ||||||||||||||
Amounts due to (from) affiliates | 929 | (929 | ) | — | — | — | |||||||||||||
Mezzanine equity | — | — | 745 | — | 745 | ||||||||||||||
Total equity | (724 | ) | 6,301 | (146 | ) | (6,036 | ) | (605 | ) | ||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 5,905 | $ | 6,505 | $ | 625 | $ | (6,051 | ) | $ | 6,984 |
As of December 31, 2017 | |||||||||||||||||||
Total current assets | $ | 13 | $ | 464 | $ | 12 | $ | (6 | ) | $ | 483 | ||||||||
Total property, plant and equipment, net | 24 | 5,580 | 92 | — | 5,696 | ||||||||||||||
Investments in consolidated subsidiaries | 5,105 | 606 | — | (5,711 | ) | — | |||||||||||||
Other assets | — | 27 | 1 | — | 28 | ||||||||||||||
TOTAL ASSETS | $ | 5,142 | $ | 6,677 | $ | 105 | $ | (5,717 | ) | $ | 6,207 | ||||||||
Total current liabilities | 122 | 613 | 3 | (6 | ) | 732 | |||||||||||||
Long-term debt | 5,306 | — | — | — | 5,306 | ||||||||||||||
Deferred gain and issuance costs, net | 287 | — | — | — | 287 | ||||||||||||||
Other long-term liabilities | 154 | 445 | 3 | — | 602 | ||||||||||||||
Amounts due to (from) affiliates | 87 | (87 | ) | — | — | — | |||||||||||||
Total equity | (814 | ) | 5,706 | 99 | (5,711 | ) | (720 | ) | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 5,142 | $ | 6,677 | $ | 105 | $ | (5,717 | ) | $ | 6,207 |
Condensed Consolidating Statements of Operations | |||||||||||||||||||
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
For the three months ended September 30, 2018 | (in millions) | ||||||||||||||||||
Total revenues and other | $ | — | $ | 766 | $ | 135 | $ | (73 | ) | $ | 828 | ||||||||
Total costs and other | 62 | 582 | 72 | (73 | ) | 643 | |||||||||||||
Non-operating (loss) income | (99 | ) | 5 | — | — | (94 | ) | ||||||||||||
NET INCOME (LOSS) | (161 | ) | 189 | 63 | — | 91 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | (25 | ) | — | (25 | ) | ||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | (161 | ) | $ | 189 | $ | 38 | $ | — | $ | 66 |
For the three months ended September 30, 2017 | |||||||||||||||||||
Total revenues and other | $ | 5 | $ | 446 | $ | 5 | $ | (11 | ) | $ | 445 | ||||||||
Total costs and other | 58 | 439 | 4 | (11 | ) | 490 | |||||||||||||
Non-operating (loss) income | (87 | ) | — | — | — | (87 | ) | ||||||||||||
NET (LOSS) INCOME | (140 | ) | 7 | 1 | — | (132 | ) | ||||||||||||
Net income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | ||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | $ | (140 | ) | $ | 7 | $ | — | $ | — | $ | (133 | ) |
Condensed Consolidating Statements of Operations | |||||||||||||||||||
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
For the nine months ended September 30, 2018 | (in millions) | ||||||||||||||||||
Total revenues and other | $ | 1 | $ | 1,878 | $ | 293 | $ | (186 | ) | $ | 1,986 | ||||||||
Total costs and other | 169 | 1,542 | 157 | (186 | ) | 1,682 | |||||||||||||
Non-operating (loss) income | (272 | ) | 5 | — | — | (267 | ) | ||||||||||||
NET INCOME (LOSS) | (440 | ) | 341 | 136 | — | 37 | |||||||||||||
Net income attributable to noncontrolling interests | — | — | (55 | ) | — | (55 | ) | ||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | (440 | ) | $ | 341 | $ | 81 | $ | — | $ | (18 | ) |
For the nine months ended September 30, 2017 | |||||||||||||||||||
Total revenues and other | $ | 22 | $ | 1,551 | $ | 10 | $ | (32 | ) | $ | 1,551 | ||||||||
Total costs and other | 165 | 1,298 | 9 | (32 | ) | 1,440 | |||||||||||||
Non-operating (loss) income | (256 | ) | 18 | — | — | (238 | ) | ||||||||||||
NET (LOSS) INCOME | (399 | ) | 271 | 1 | — | (127 | ) | ||||||||||||
Net income attributable to noncontrolling interest | — | — | (1 | ) | — | (1 | ) | ||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | $ | (399 | ) | $ | 271 | $ | — | $ | — | $ | (128 | ) |
Condensed Consolidating Statements of Cash Flows | |||||||||||||||||||
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
For the nine months ended September 30, 2018 | (in millions) | ||||||||||||||||||
Net cash (used) provided by operating activities | $ | (433 | ) | $ | 645 | $ | 181 | $ | — | $ | 393 | ||||||||
Net cash used in investing activities | (3 | ) | (921 | ) | (41 | ) | — | (965 | ) | ||||||||||
Net cash provided (used) by financing activities | 429 | 278 | (124 | ) | — | 583 | |||||||||||||
Increase in cash | (7 | ) | 2 | 16 | — | 11 | |||||||||||||
Cash—beginning of period | 7 | 8 | 5 | — | 20 | ||||||||||||||
Cash—end of period | $ | — | $ | 10 | $ | 21 | $ | — | $ | 31 |
For the nine months ended September 30, 2017 | |||||||||||||||||||
Net cash (used) provided by operating activities | $ | (403 | ) | $ | 621 | $ | 7 | $ | — | $ | 225 | ||||||||
Net cash used in investing activities | (2 | ) | (90 | ) | (82 | ) | — | (174 | ) | ||||||||||
Net cash provided (used) by financing activities | 409 | (536 | ) | 92 | — | (35 | ) | ||||||||||||
Increase (decrease) in cash | 4 | (5 | ) | 17 | — | 16 | |||||||||||||
Cash—beginning of period | — | 12 | — | — | 12 | ||||||||||||||
Cash—end of period | $ | 4 | $ | 7 | $ | 17 | $ | — | $ | 28 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Brent oil ($/Bbl) | $ | 75.97 | $ | 52.18 | $ | 72.68 | $ | 52.59 | |||||||
WTI oil ($/Bbl) | $ | 69.50 | $ | 48.21 | $ | 66.75 | $ | 49.47 | |||||||
NYMEX gas ($/MMBtu) | $ | 2.88 | $ | 2.95 | $ | 2.83 | $ | 3.12 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Oil (MBbl/d) | |||||||||||
San Joaquin Basin | 54 | 51 | 52 | 52 | |||||||
Los Angeles Basin | 26 | 27 | 25 | 27 | |||||||
Ventura Basin | 4 | 4 | 4 | 5 | |||||||
Sacramento Basin | — | — | — | — | |||||||
Total | 84 | 82 | 81 | 84 | |||||||
NGLs (MBbl/d) | |||||||||||
San Joaquin Basin | 16 | 15 | 16 | 15 | |||||||
Los Angeles Basin | — | — | — | — | |||||||
Ventura Basin | 1 | 1 | 1 | 1 | |||||||
Sacramento Basin | — | — | — | — | |||||||
Total | 17 | 16 | 17 | 16 | |||||||
Natural gas (MMcf/d) | |||||||||||
San Joaquin Basin | 172 | 139 | 162 | 140 | |||||||
Los Angeles Basin | 1 | 2 | 1 | 1 | |||||||
Ventura Basin | 6 | 8 | 7 | 8 | |||||||
Sacramento Basin | 29 | 33 | 30 | 32 | |||||||
Total | 208 | 182 | 200 | 181 | |||||||
Total Production (MBoe/d)(a) | 136 | 128 | 131 | 130 |
Note: | MBbl/d refers to thousands of barrels per day; MMcf/d refers to millions of cubic feet per day; MBoe/d refers to thousands of barrels of oil equivalent per day. |
(a) | Natural gas volumes have been converted to Boe based on the equivalence of energy content between six Mcf of natural gas and one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Oil prices with hedge ($ per Bbl) | $ | 63.63 | $ | 50.02 | $ | 63.53 | $ | 49.42 | |||||||
Oil prices without hedge ($ per Bbl) | $ | 73.73 | $ | 48.90 | $ | 71.53 | $ | 48.76 | |||||||
NGLs prices ($ per Bbl) | $ | 45.72 | $ | 34.63 | $ | 43.71 | $ | 33.00 | |||||||
Natural gas prices ($ per Mcf)(a) | $ | 3.16 | $ | 2.56 | $ | 2.73 | $ | 2.64 |
(a) | For the three and nine months ended September 30, 2018, the realized gas price was impacted by the adoption of new accounting rules on revenue recognition and would have been $2.98 and $2.52 per Mcf, respectively, under prior accounting standards. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Oil with hedge as a percentage of Brent | 84 | % | 96 | % | 87 | % | 94 | % | |||
Oil with hedge as a percentage of WTI | 92 | % | 104 | % | 95 | % | 100 | % | |||
Oil without hedge as a percentage of Brent | 97 | % | 94 | % | 98 | % | 93 | % | |||
Oil without hedge as a percentage of WTI | 106 | % | 101 | % | 107 | % | 99 | % | |||
NGLs as a percentage of Brent | 60 | % | 66 | % | 60 | % | 63 | % | |||
NGLs as a percentage of WTI | 66 | % | 72 | % | 65 | % | 67 | % | |||
Natural gas as a percentage of NYMEX(a) | 110 | % | 87 | % | 96 | % | 85 | % |
(a) | For the three and nine months ended September 30, 2018, the gas price realization as a percentage of NYMEX was impacted by the adoption of new accounting rules on revenue recognition and would have been 103% and 89%, respectively, under prior accounting standards. |
September 30, 2018 | December 31, 2017 | ||||||
(in millions) | |||||||
Cash | $ | 31 | $ | 20 | |||
Trade receivables | $ | 293 | $ | 277 | |||
Inventories | $ | 69 | $ | 56 | |||
Other current assets, net | $ | 153 | $ | 130 | |||
Property, plant and equipment, net | $ | 6,386 | $ | 5,696 | |||
Other assets | $ | 52 | $ | 28 | |||
Accounts payable | $ | 349 | $ | 257 | |||
Accrued liabilities | $ | 522 | $ | 475 | |||
Long-term debt | $ | 5,108 | $ | 5,306 | |||
Deferred gain and issuance costs, net | $ | 253 | $ | 287 | |||
Other long-term liabilities | $ | 612 | $ | 602 | |||
Mezzanine equity | $ | 745 | $ | — | |||
Equity attributable to common stock | $ | (725 | ) | $ | (814 | ) | |
Equity attributable to noncontrolling interests | $ | 120 | $ | 94 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Production costs | $ | 18.92 | $ | 18.90 | $ | 18.98 | $ | 18.31 | |||||||
Production costs, excluding effects of PSC-type contracts(a) | $ | 17.55 | $ | 17.81 | $ | 17.48 | $ | 17.21 | |||||||
Field general and administrative expenses(b) | $ | 1.12 | $ | 0.77 | $ | 0.98 | $ | 0.76 | |||||||
Field depreciation, depletion and amortization(b) | $ | 9.22 | $ | 10.73 | $ | 9.33 | $ | 10.92 | |||||||
Field taxes other than on income(b) | $ | 2.97 | $ | 2.64 | $ | 2.68 | $ | 2.34 |
(a) | As described in the Operations section, the reporting of our PSC-type contracts creates a difference between reported production costs, which are for the full field, and reported volumes, which are only our net share, inflating the per barrel production costs. These amounts represent the production costs for the company after adjusting for this difference. |
(b) | Excludes corporate amounts. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions) | |||||||||||||||
Oil and gas sales(a) | $ | 700 | $ | 461 | $ | 1,932 | $ | 1,387 | |||||||
Net derivative (loss) gain | (54 | ) | (65 | ) | (259 | ) | 51 | ||||||||
Other revenue(a) | 182 | 49 | 313 | 113 | |||||||||||
Production costs | (236 | ) | (222 | ) | (679 | ) | (649 | ) | |||||||
General and administrative expenses(b) | (81 | ) | (61 | ) | (234 | ) | (183 | ) | |||||||
Depreciation, depletion and amortization | (128 | ) | (134 | ) | (372 | ) | (412 | ) | |||||||
Taxes other than on income | (45 | ) | (39 | ) | (120 | ) | (103 | ) | |||||||
Exploration expense | (4 | ) | (5 | ) | (18 | ) | (17 | ) | |||||||
Other expenses, net(a) | (149 | ) | (29 | ) | (259 | ) | (76 | ) | |||||||
Interest and debt expense, net | (95 | ) | (85 | ) | (281 | ) | (252 | ) | |||||||
Net gain on early extinguishment of debt | 2 | — | 26 | 4 | |||||||||||
Gain on asset divestitures | 3 | — | 4 | 21 | |||||||||||
Other non-operating expenses(b) | (4 | ) | (2 | ) | (16 | ) | (11 | ) | |||||||
Income (loss) before income taxes | 91 | (132 | ) | 37 | (127 | ) | |||||||||
Income tax | — | — | — | — | |||||||||||
Net income (loss) | 91 | (132 | ) | 37 | (127 | ) | |||||||||
Net income attributable to noncontrolling interests | (25 | ) | (1 | ) | (55 | ) | (1 | ) | |||||||
Net income (loss) attributable to common stock | $ | 66 | $ | (133 | ) | $ | (18 | ) | $ | (128 | ) | ||||
Adjusted net income (loss) | $ | 41 | $ | (52 | ) | $ | 35 | $ | (173 | ) | |||||
Adjusted EBITDAX | $ | 308 | $ | 187 | $ | 803 | $ | 548 | |||||||
Effective tax rate | — | % | — | % | — | % | — | % |
(a) | We adopted the new revenue recognition standard on January 1, 2018 that required certain sales-related costs to be reported as expense as opposed to being netted against revenue. The adoption of this standard does not affect net income. Results for reporting periods beginning after January 1, 2018 are presented under the new accounting standard while prior periods are not adjusted and continue to be reported under accounting standards in effect during the prior periods. Under prior accounting standards, for the three and nine months ended September 30, 2018, oil and gas sales would have been $695 million and $1,915 million, respectively, other revenue would have been $177 million and $242 million, respectively, and other expenses, net would have been $139 million and $171 million, respectively. See Note 12 Revenue Recognition in the Notes to the Condensed Consolidated Financial Statements included in Part I of this Form 10-Q for more information. |
(b) | For the three and nine months ended September 30, 2017, certain pension benefit costs of $2 million and $8 million, respectively, have been reclassified to other non-operating expenses to conform to the current year presentation in accordance with new accounting rules adopted on January 1, 2018 related to the presentation of net periodic benefit costs for pension and postretirement benefits in the Condensed Consolidated Statements of Operations. See Note 2 Accounting and Disclosure Changes in the Notes to the Condensed Consolidated Financial Statements included in Part I of this Form 10-Q for more information. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions, except per Boe amounts) | |||||||||||||||
General and administrative expenses | |||||||||||||||
Cash-settled awards | $ | 11 | $ | 2 | $ | 33 | $ | 3 | |||||||
Equity-settled awards | 2 | 3 | 10 | 10 | |||||||||||
Total stock-based compensation in G&A | $ | 13 | $ | 5 | $ | 43 | $ | 13 | |||||||
Total stock-based compensation in G&A per Boe | $ | 1.04 | $ | 0.43 | $ | 1.20 | $ | 0.37 | |||||||
Production costs | |||||||||||||||
Cash-settled awards | $ | 2 | $ | — | $ | 8 | $ | — | |||||||
Equity-settled awards | 1 | 1 | 3 | 3 | |||||||||||
Total stock-based compensation in production costs | $ | 3 | $ | 1 | $ | 11 | $ | 3 | |||||||
Total stock-based compensation in production costs per Boe | $ | 0.24 | $ | 0.09 | $ | 0.31 | $ | 0.08 | |||||||
Total company stock-based compensation | $ | 16 | $ | 6 | $ | 54 | $ | 16 | |||||||
Total company stock-based compensation per Boe | $ | 1.28 | $ | 0.52 | $ | 1.51 | $ | 0.45 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions, except share data) | |||||||||||||||
Net income (loss) | $ | 91 | $ | (132 | ) | $ | 37 | $ | (127 | ) | |||||
Net income attributable to noncontrolling interests | (25 | ) | (1 | ) | (55 | ) | (1 | ) | |||||||
Net income (loss) attributable to common stock | 66 | (133 | ) | (18 | ) | (128 | ) | ||||||||
Unusual, infrequent and other items: | |||||||||||||||
Non-cash derivative (gain) loss, excluding noncontrolling interest | (28 | ) | 72 | 71 | (38 | ) | |||||||||
Early retirement and severance costs | — | 1 | 4 | 4 | |||||||||||
Net gain on early extinguishment of debt | (2 | ) | — | (26 | ) | (4 | ) | ||||||||
Gain on asset divestitures | (3 | ) | — | (4 | ) | (21 | ) | ||||||||
Other, net | 8 | 8 | 8 | 14 | |||||||||||
Total unusual, infrequent and other items | (25 | ) | 81 | 53 | (45 | ) | |||||||||
Adjusted net income (loss) | $ | 41 | $ | (52 | ) | $ | 35 | $ | (173 | ) | |||||
Net income (loss) attributable to common stock per diluted share | $ | 1.32 | $ | (3.11 | ) | $ | (0.38 | ) | $ | (3.01 | ) | ||||
Adjusted net income (loss) per diluted share | $ | 0.81 | $ | (1.22 | ) | $ | 0.71 | $ | (4.07 | ) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions) | |||||||||||||||
Net income (loss) | $ | 91 | $ | (132 | ) | $ | 37 | $ | (127 | ) | |||||
Interest and debt expense, net | 95 | 85 | 281 | 252 | |||||||||||
Interest income | — | — | (1 | ) | — | ||||||||||
Depreciation, depletion and amortization | 128 | 134 | 372 | 412 | |||||||||||
Exploration expense | 4 | 5 | 18 | 17 | |||||||||||
Unusual, infrequent and other items | (25 | ) | 81 | 53 | (45 | ) | |||||||||
Other non-cash items | 15 | 14 | 43 | 39 | |||||||||||
Adjusted EBITDAX | $ | 308 | $ | 187 | $ | 803 | $ | 548 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Net cash provided by operating activities | $ | 393 | $ | 225 | |||
Cash interest | 284 | 251 | |||||
Exploration expenditures | 14 | 16 | |||||
Changes in operating assets and liabilities | 113 | 42 | |||||
Other, net | (1 | ) | 14 | ||||
Adjusted EBITDAX | $ | 803 | $ | 548 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions) | |||||||||||||||
Non-cash derivative gain (loss), excluding noncontrolling interest | $ | 28 | $ | (72 | ) | $ | (71 | ) | $ | 38 | |||||
Non-cash derivative loss included in noncontrolling interest | (3 | ) | (1 | ) | (10 | ) | (2 | ) | |||||||
Net (payments) proceeds on settled commodity derivatives | (79 | ) | 8 | (178 | ) | 15 | |||||||||
Net derivative (loss) gain from commodity contracts | $ | (54 | ) | $ | (65 | ) | $ | (259 | ) | $ | 51 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Net cash provided by operating activities | $ | 393 | $ | 225 | |||
Net cash used in investing activities: | |||||||
Capital investments, net of accruals | $ | (464 | ) | $ | (206 | ) | |
Acquisitions, divestitures and other | $ | (501 | ) | $ | 32 | ||
Net cash provided (used) by financing activities | $ | 583 | $ | (35 | ) | ||
Adjusted EBITDAX | $ | 803 | $ | 548 |
Outstanding Principal (in millions) | Interest Rate | Maturity | Security | ||||||
Credit Agreements | |||||||||
2014 Revolving Credit Facility | $ | 342 | LIBOR plus 3.25%-4.00% ABR plus 2.25%-3.00% | June 30, 2021 | Shared First-Priority Lien | ||||
2017 Credit Agreement | 1,300 | LIBOR plus 4.75% ABR plus 3.75% | December 31, 2022(a) | Shared First-Priority Lien | |||||
2016 Credit Agreement | 1,000 | LIBOR plus 10.375% ABR plus 9.375% | December 31, 2021 | First-Priority Lien | |||||
Second Lien Notes | |||||||||
Second Lien Notes | 2,122 | 8% | December 15, 2022(b) | Second-Priority Lien | |||||
Senior Notes | |||||||||
5% Senior Notes due 2020 | 100 | 5% | January 15, 2020 | Unsecured | |||||
5½% Senior Notes due 2021 | 100 | 5.5% | September 15, 2021 | Unsecured | |||||
6% Senior Notes due 2024 | 144 | 6% | November 15, 2024 | Unsecured | |||||
Total | $ | 5,108 |
(a) | The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million in principal of the 2016 Credit Agreement is outstanding at that time. |
(b) | The Second Lien Notes require principal repayments of approximately $335 million in June 2021, $67 million in December 2021 and $70 million in June 2022. |
• | permit us to draw on our revolver to repurchase our Second Lien Notes and Senior Notes at a discount to par in an amount up to $300 million; |
• | permit us to draw on our revolver to repurchase our Second Lien Notes and Senior Notes at a discount to par, without regard to time limit, in an amount not to exceed a specified portion of proceeds from future dispositions of certain assets; |
• | in connection with any repurchase of certain of our indebtedness, increase the minimum liquidity required to make such repurchase (calculated on a pro forma basis after giving effect to the repurchase) from $250 million to $300 million; and |
• | enhance our ability to refinance our outstanding term loans under our 2017 Credit Agreement and 2016 Credit Agreement, Second Lien Notes and Senior Notes, in each case by allowing the use of permitted refinancing indebtedness for such refinancing so long as certain conditions are met. |
• | permit us to repurchase our Second Lien Notes and Senior Notes at a discount to par, without regard to time limit, in an amount not to exceed a specified portion of proceeds from dispositions of certain assets; and |
• | enhance our ability to refinance our outstanding Second Lien Notes, Senior Notes and 2016 Credit Agreement, in each case by allowing the use of permitted refinancing indebtedness for such refinancing so long as certain conditions are met. |
Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | ||||||||||||||||||
Sold Calls: | |||||||||||||||||||||||
Barrels per day | 15,000 | 15,000 | 5,000 | — | — | — | |||||||||||||||||
Weighted-average price per barrel | $ | 58.83 | $ | 66.15 | $ | 68.45 | $ | — | $ | — | $ | — | |||||||||||
Purchased Calls: | |||||||||||||||||||||||
Barrels per day | — | 2,000 | — | — | — | — | |||||||||||||||||
Weighted-average price per barrel | $ | — | $ | 71.00 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Purchased Puts: | |||||||||||||||||||||||
Barrels per day | — | 38,000 | 40,000 | 40,000 | 35,000 | 10,000 | |||||||||||||||||
Weighted-average price per barrel | $ | — | $ | 65.66 | $ | 69.75 | $ | 73.13 | $ | 75.71 | $ | 75.00 | |||||||||||
Sold Puts: | |||||||||||||||||||||||
Barrels per day | 19,000 | 40,000 | 35,000 | 40,000 | 35,000 | 10,000 | |||||||||||||||||
Weighted-average price per barrel | $ | 45.00 | $ | 51.88 | $ | 55.71 | $ | 57.50 | $ | 60.00 | $ | 60.00 | |||||||||||
Swaps: | |||||||||||||||||||||||
Barrels per day | 48,000 | 7,000(1) | — | — | — | — | |||||||||||||||||
Weighted-average price per barrel | $ | 60.35 | $ | 67.71 | $ | — | $ | — | $ | — | $ | — |
(1) | Certain of our counterparties have options to increase swap volumes by up to 5,000 barrels per day at a weighted-average Brent price of $70.00 for the first quarter of 2019. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1.A. | Risk Factors |
Item 5. | Other Disclosures |
Item 6. | Exhibits |
10.1 | Eighth Amendment to 2014 Credit Agreement, dated August 20, 2018 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 24, 2018, and incorporated herein by reference). |
10.2 | First Amendment to 2017 Credit Agreement, dated September 18, 2018 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 18, 2018, and incorporated herein by reference). |
12* | |
31.1* | |
31.2* | |
32.1* | |
101.INS* | XBRL Instance Document. |
101.SCH* | XBRL Taxonomy Extension Schema Document. |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. |
CALIFORNIA RESOURCES CORPORATION |
DATE: | November 1, 2018 | /s/ Roy Pineci | |
Roy Pineci | |||
Executive Vice President - Finance | |||
(Principal Accounting Officer) |
Nine months ended September 30, | Year ended December 31, | ||||||||||||||||||||||
(in millions, except ratios) | 2018 | 2017 | 2016 | 2015 | 2014(a) | 2013 | |||||||||||||||||
EARNINGS: | |||||||||||||||||||||||
Income (loss) before income taxes(b)(c) | $ | 37 | $ | (262 | ) | $ | 201 | $ | (5,476 | ) | $ | (2,421 | ) | $ | 1,447 | ||||||||
Net income attributable to noncontrolling interests | (55 | ) | (4 | ) | — | — | — | — | |||||||||||||||
Fixed charges | 348 | 350 | 334 | 339 | 79 | 4 | |||||||||||||||||
Capitalized interest | (6 | ) | (3 | ) | (2 | ) | (9 | ) | (4 | ) | — | ||||||||||||
Earnings (loss) before fixed charges | $ | 324 | $ | 81 | $ | 533 | $ | (5,146 | ) | $ | (2,346 | ) | $ | 1,451 | |||||||||
FIXED CHARGES | |||||||||||||||||||||||
Interest and debt expense, net(d) | $ | 339 | $ | 343 | $ | 328 | $ | 326 | $ | 72 | $ | — | |||||||||||
Capitalized interest | 6 | 3 | 2 | 9 | 4 | — | |||||||||||||||||
Rental expense representative of interest factor | 3 | 4 | 4 | 4 | 3 | 4 | |||||||||||||||||
Total fixed charges | $ | 348 | $ | 350 | $ | 334 | $ | 339 | $ | 79 | $ | 4 | |||||||||||
RATIO OF EARNINGS TO FIXED CHARGES | n/a | n/a | 1.6 | n/a | n/a | 363 | |||||||||||||||||
INSUFFICIENT COVERAGE | $ | 24 | $ | 269 | $ | — | $ | 5,485 | $ | 2,425 | $ | — |
(a) | Note: If we had been a stand-alone company for the full year 2014 and had the same level of debt throughout the year as we did on December 31, 2014, of approximately $6.4 billion, we would have incurred $314 million of pre-tax interest expense, on a pro-forma basis, for the year ended December 31, 2014, compared to the $72 million pre-tax interest expense reported on our statement of operations for the year then ended. Therefore, the insufficient coverage on a pro-forma basis would have been approximately $2,667 million. |
(b) | The nine months ended September 30, 2018 amount includes unusual, infrequent and other items consisting of $71 million of non-cash derivative losses on outstanding hedges, $26 million of net gains on the early extinguishment of debt, $4 million of gains from asset divestitures and $12 million of other unusual and infrequent charges. Excluding these items, our earnings before fixed charges for the nine months ended September 30, 2018 would have been approximately $377 million. Therefore, our ratio of earnings to fixed charges would have been 1.1. |
(c) | The year ended December 31, 2017 amount includes unusual and infrequent items consisting of $78 million of non-cash derivative losses on outstanding hedges, $21 million of gains from asset divestitures, $4 million of net gains on the early extinguishment of debt and $26 million of other unusual, out-of-period and infrequent charges. Excluding these items, our earnings before fixed charges for the year ended December 31, 2017 would have been approximately $160 million. Therefore, the insufficient coverage would have been approximately $190 million. |
(d) | Excludes $58 million of amortization of deferred gains for the nine months ended September 30, 2018. |
1. | I have reviewed this quarterly report on Form 10-Q of California Resources Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Todd A. Stevens | ||
Todd A. Stevens | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of California Resources Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Marshall D. Smith | ||||
Marshall D. Smith | ||||
Senior Executive Vice President and | ||||
Chief Financial Officer | ||||
(Principal Financial Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Todd A. Stevens | ||||
Name: | Todd A. Stevens | |||
Title: | President and Chief Executive Officer | |||
Date: | November 1, 2018 |
/s/ Marshall D. Smith | ||||
Name: | Marshall D. Smith | |||
Title: | Senior Executive Vice President and Chief Financial Officer | |||
Date: | November 1, 2018 |
Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Document and Entity Information | |
Entity Registrant Name | California Resources Corp |
Entity Central Index Key | 0001609253 |
Document Type | 10-Q |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | false |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Common Stock, Shares Outstanding | 48,565,905 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Condensed Consolidated Balance Sheets | ||
Preferred stock, authorized shares | 20,000,000 | 20,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, outstanding shares | 48,565,905 | 42,901,946 |
Condensed Consolidated Statements of Operations - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
REVENUES AND OTHER | ||||
Oil and gas sales | $ 700 | $ 461 | $ 1,932 | $ 1,387 |
Net derivative (loss) gain from commodity contracts | (54) | (65) | (259) | 51 |
Other revenue | 182 | 49 | 313 | 113 |
Total revenues and other | 828 | 445 | 1,986 | 1,551 |
COSTS AND OTHER | ||||
Production costs | 236 | 222 | 679 | 649 |
General and administrative expenses | 81 | 61 | 234 | 183 |
Depreciation, depletion and amortization | 128 | 134 | 372 | 412 |
Taxes other than on income | 45 | 39 | 120 | 103 |
Exploration expense | 4 | 5 | 18 | 17 |
Other expenses, net | 149 | 29 | 259 | 76 |
Total costs and other | 643 | 490 | 1,682 | 1,440 |
OPERATING INCOME (LOSS) | 185 | (45) | 304 | 111 |
NON-OPERATING (LOSS) INCOME | ||||
Interest and debt expense, net | (95) | (85) | (281) | (252) |
Net gain on early extinguishment of debt | 2 | 26 | 4 | |
Gain on asset divestitures | 3 | 4 | 21 | |
Other non-operating expenses | (4) | (2) | (16) | (11) |
INCOME (LOSS) BEFORE INCOME TAXES | 91 | (132) | 37 | (127) |
Income tax | 0 | 0 | 0 | 0 |
NET INCOME (LOSS) | 91 | (132) | 37 | (127) |
Net income attributable to noncontrolling interests | (25) | (1) | (55) | (1) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ 66 | $ (133) | $ (18) | $ (128) |
Net income (loss) attributable to common stock per share | ||||
Basic (in dollars per share) | $ 1.34 | $ (3.11) | $ (0.38) | $ (3.01) |
Diluted (in dollars per share) | $ 1.32 | $ (3.11) | $ (0.38) | $ (3.01) |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Condensed Consolidated Statements of Comprehensive Income | ||||||
Net income (loss) | $ 91 | $ (132) | $ 37 | $ (127) | ||
Other comprehensive income items: | ||||||
Reclassification of realized losses on pension and postretirement benefits to income | [1] | 1 | 3 | 4 | ||
Total other comprehensive income | 1 | 3 | 4 | |||
Comprehensive income attributable to noncontrolling interest | (25) | (1) | (55) | (1) | ||
Comprehensive income (loss) attributable to common stock | $ 66 | $ (132) | $ (15) | $ (124) | ||
|
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Condensed Consolidated Statements of Comprehensive Income | ||||
Pension and postretirement income, associated tax | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ 37 | $ (127) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 372 | 412 |
Net derivative loss (gain) from commodity contracts | 259 | (51) |
Net (payments) proceeds on settled commodity derivatives | (178) | 15 |
Net gain on early extinguishment of debt | (26) | (4) |
Amortization of deferred gain | (58) | (55) |
Gain on asset divestitures | (4) | (21) |
Other non-cash charges to income, net | 78 | 46 |
Dry hole expenses | 4 | 1 |
Changes in operating assets and liabilities, net | (91) | 9 |
Net cash provided by operating activities | 393 | 225 |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Capital investments | (504) | (232) |
Changes in capital investment accruals | 40 | 26 |
Asset divestitures | 17 | 33 |
Acquisitions | (514) | |
Other | (4) | (1) |
Net cash used in investing activities | (965) | (174) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from 2014 Revolving Credit Facility | 1,822 | 1,000 |
Repayments of 2014 Revolving Credit Facility | (1,843) | (1,010) |
Payments on 2014 Term Loan | (91) | |
Debt repurchases | (149) | (24) |
Debt transaction costs | (4) | (2) |
Contributions from noncontrolling interest holders, net | 796 | 98 |
Distributions paid to noncontrolling interest holders | (80) | (6) |
Issuance of common stock | 52 | 2 |
Shares canceled for taxes | (11) | (2) |
Net cash provided (used) by financing activities | 583 | (35) |
Increase in cash | 11 | 16 |
Cash-beginning of period | 20 | 12 |
Cash-end of period | $ 31 | $ 28 |
Condensed Consolidated Statements of Equity - USD ($) $ in Millions |
Equity Attributable to Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive (Loss) Income |
Equity Attributable to Noncontrolling Interest |
Total |
|||||
---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2016 | $ (557) | $ 4,861 | $ (5,404) | $ (14) | $ (557) | ||||||
Increase (decrease) in Equity | |||||||||||
Net (loss) income | (128) | (128) | $ 1 | (127) | |||||||
Contributions from noncontrolling interest holders, net | 98 | 98 | |||||||||
Distributions paid to noncontrolling interest holders | (6) | (6) | |||||||||
Other comprehensive income | 4 | 4 | 4 | ||||||||
Share-based compensation, net | 14 | 14 | 14 | ||||||||
Ending balance at Sep. 30, 2017 | (667) | 4,875 | (5,532) | (10) | 93 | (574) | |||||
Beginning balance at Dec. 31, 2017 | (814) | 4,879 | (5,670) | (23) | 94 | (720) | |||||
Increase (decrease) in Equity | |||||||||||
Net (loss) income | (18) | (18) | (16) | (34) | [1] | ||||||
Contributions from noncontrolling interest holders, net | 82 | 82 | [1] | ||||||||
Distributions paid to noncontrolling interest holders | (40) | (40) | [1] | ||||||||
Issuance of common stock | [2] | 101 | 101 | 101 | |||||||
Other comprehensive income | 3 | 3 | 3 | ||||||||
Share-based compensation, net | 3 | 3 | 3 | ||||||||
Ending balance at Sep. 30, 2018 | $ (725) | $ 4,983 | $ (5,688) | $ (20) | $ 120 | $ (605) | [1] | ||||
|
Condensed Consolidated Statements of Equity (Parenthetical) shares in Thousands, $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
shares
| ||||
Value of common stock at issuance | $ 101 | [1] | ||
Chevron | ||||
Common stock shares issued (in shares) | shares | 2,850 | |||
Value of common stock at issuance | $ 51 | |||
Ares-led investor group | Ares JV | ||||
Common stock shares issued (in shares) | shares | 2,300 | |||
Value of common stock at issuance | $ 50 | |||
|
THE SPIN-OFF AND BASIS OF PRESENTATION |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
THE SPIN-OFF AND BASIS OF PRESENTATION | |
THE SPIN-OFF AND BASIS OF PRESENTATION | NOTE 1 THE SPIN-OFF AND BASIS OF PRESENTATION
The Separation and Spin-off
We are an independent oil and natural gas exploration and production company operating properties within California. We were incorporated in Delaware as a wholly owned subsidiary of Occidental Petroleum Corporation (Occidental) on April 23, 2014 and remained a wholly owned subsidiary of Occidental until November 30, 2014. On November 30, 2014, Occidental distributed shares of our common stock on a pro-rata basis to Occidental stockholders (the Spin-off). We became an independent, publicly traded company on December 1, 2014. Occidental initially retained approximately 18.5% of our outstanding shares of common stock, which were distributed to Occidental stockholders on March 24, 2016.
Except when the context otherwise requires or where otherwise indicated, all references to ‘‘CRC,’’ the ‘‘company,’’ ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to California Resources Corporation and its subsidiaries, and all references to ‘‘Occidental’’ refer to Occidental Petroleum Corporation, our former parent, and its subsidiaries.
Basis of Presentation
In the opinion of our management, the accompanying financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position as of September 30, 2018 and December 31, 2017 and the statements of operations, comprehensive income, cash flows and equity for the three and nine months ended September 30, 2018 and 2017, as applicable. We have eliminated all significant intercompany transactions and accounts. We account for our share of oil and gas exploration and production ventures in which we have a direct working interest by reporting our proportionate share of assets, liabilities, revenues, costs and cash flows within the relevant lines on our balance sheets, statements of operations and cash flows.
We have prepared this report pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC) applicable to interim financial information, which permit the omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information not misleading. This Form 10-Q should be read in conjunction with the consolidated financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2017.
Certain prior year amounts have been reclassified to conform to the 2018 presentation. On the statements of operations, we reclassified interest cost, expected return on assets, amortization of prior service costs and settlements/curtailments, all associated with defined benefit pension plans, from general and administrative expenses to other non-operating expenses, net in accordance with new accounting rules. See Note 2 Accounting and Disclosure Changes for more information. |
ACCOUNTING AND DISCLOSURE CHANGES |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
ACCOUNTING AND DISCLOSURE CHANGES | |
ACCOUNTING AND DISCLOSURE CHANGES | NOTE 2 ACCOUNTING AND DISCLOSURE CHANGES
Recently Issued Accounting and Disclosure Changes
In February 2016, the Financial Accounting Standards Board (FASB) issued rules requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months and to include qualitative and quantitative disclosures with respect to the amount, timing, and uncertainty of cash flows arising from leases. In January 2018, the FASB issued an update to the lease standard providing an optional transition approach for land easements allowing entities to evaluate only new or modified land easements. In July 2018, the FASB provided optional transition relief allowing a prospective approach in applying the new rules by not adjusting comparative period financial information for the effects of the new rules and not requiring disclosures for periods before the effective date. These rules will be effective for us on January 1, 2019, which we expect to apply prospectively. We have identified our lease population and are currently implementing lease accounting software among other activities. We expect the adoption of these rules to increase both our assets and liabilities by the same amount, which could be significant.
Recently Adopted Accounting and Disclosure Changes
In May 2014, the FASB issued rules on the recognition of revenue that created Topic 606 (ASC 606), which superseded existing revenue recognition requirements reported in accordance with U.S. generally accepted accounting principles (GAAP), and required an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The new rules required certain sales-related costs to be reported as other expense as opposed to being netted against oil and gas sales or other revenue. We adopted ASC 606 on January 1, 2018 using the modified retrospective method with no adjustment to opening retained earnings. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect prior to adoption. See Note 12 Revenue Recognition for more information.
In March 2017, the FASB issued rules requiring employers that sponsor defined benefit plans for pensions and postretirement benefits to present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization to assets. Employers are required to present the other components of the net periodic benefit cost separately from the line item that includes the service cost and outside of any subtotal of operating income. We adopted these rules in the first quarter of 2018 with no significant impact on our financial statements. The interest cost, expected return on assets, amortization of prior service costs and settlements/curtailments have been reclassified from general and administrative expense to other non-operating expenses. We elected to use the amounts disclosed for the various components of net periodic benefit cost in the pension and postretirement benefit plans footnote as the basis of the retrospective application.
In May 2017, the FASB issued rules to simplify the guidance on the modification of share-based payment awards. The amendments provide clarity on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting prospectively. We adopted these rules in the first quarter of 2018 with no impact on our financial statements.
Components of accumulated other comprehensive income (AOCI) are recorded net of related taxes determined using prevailing rates when the components are initially recorded. When the U.S. federal corporate tax rates changed in December 2017, a difference arose between tax amounts recorded to AOCI as compared to the expected tax amount using the newly enacted corporate tax rates. Our accounting policy is to remove such residual tax differences from AOCI when the related components are ultimately settled. In February 2018, the FASB issued rules that give entities the option to reclassify this residual difference from AOCI to retained earnings. We early adopted this accounting standard in the first quarter of 2018 without reclassifying this residual tax difference to retained earnings. |
OTHER INFORMATION |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INFORMATION |
Cash at September 30, 2018 and December 31, 2017 included approximately $13 million and $5 million, respectively, which is restricted under one of our joint venture agreements.
Other current assets, net as of September 30, 2018 and December 31, 2017 consisted of the following:
In the second quarter of 2018, we divested a non-core asset that was held for sale in the prior period. See Note 7 Acquisitions and Divestitures for more information.
Accrued liabilities as of September 30, 2018 and December 31, 2017 consisted of the following:
Other long-term liabilities included asset retirement obligations of $417 million and $403 million at September 30, 2018 and December 31, 2017, respectively.
Fair Value of Financial Instruments
The carrying amounts of cash and other on-balance sheet financial instruments, other than debt, approximate fair value.
Supplemental Cash Flow Information
We did not make U.S. federal and state income tax payments during the nine months ended September 30, 2018 and 2017. Interest paid, net of capitalized amounts, totaled approximately $278 million and $249 million for the nine months ended September 30, 2018 and 2017, respectively. Non-cash financing activities in 2018 included 2.85 million shares of common stock (valued at $51 million) issued in connection with the Elk Hills transaction. See Note 7 Acquisitions and Divestitures for more on the Elk Hills transaction. |
INVENTORIES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | ||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | NOTE 4 INVENTORIES
Inventories as of September 30, 2018 and December 31, 2017 consisted of the following:
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DEBT |
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DEBT | NOTE 5 DEBT
As of September 30, 2018 and December 31, 2017, our long-term debt consisted of the following credit agreements, second lien notes and senior notes:
Note: For a detailed description of our credit agreements, second lien notes and senior notes, please see our most recent Form 10-K for the year ended December 31, 2017.
Deferred Gain and Issuance Costs
As of September 30, 2018, net deferred gain and issuance costs were $253 million, consisting of $357 million of a deferred gain offset by $104 million of deferred issuance costs and original issue discounts. The December 31, 2017 net deferred gain and issuance costs were $287 million, consisting of $415 million of a deferred gain offset by $128 million of deferred issuance costs and original issue discounts.
2014 Revolving Credit Facility
As of September 30, 2018, we had approximately $490 million of available borrowing capacity, subject to a $150 million month-end minimum liquidity requirement. The borrowing base under this facility was reaffirmed at $2.3 billion in October 2018. Our 2014 Revolving Credit Facility also includes a sub-limit of $400 million for the issuance of letters of credit. As of September 30, 2018 and December 31, 2017, we had letters of credit outstanding of approximately $167 million and $148 million, respectively. These letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.
Note Repurchases
In the third quarter of 2018, we repurchased $31 million in aggregate principal amount of our 8% senior secured second lien notes due December 15, 2022 (Second Lien Notes) and $1 million of our 6% senior notes due November 15, 2024 (2024 Notes) for $30 million, resulting in a $2 million pre-tax gain, net of a reduction in deferred issuance costs. In the nine months ended September 30, 2018, we repurchased $128 million and $49 million in aggregate principal amount of our Second Lien Notes and our 2024 Notes, respectively, for $149 million in cash resulting in a pre-tax gain of $26 million, net of a reduction in deferred issuance costs.
Fair Value
We estimate the fair value of fixed-rate debt, which is classified as Level 1, based on prices from known market transactions for our instruments. The estimated fair value of our debt at September 30, 2018 and December 31, 2017, including the fair value of variable-rate debt, was approximately $5.0 billion and $4.8 billion, respectively, compared to a carrying value of approximately $5.1 billion and $5.3 billion, respectively.
Amendments
On August 20, 2018, we entered into an amendment to the 2014 Credit Agreement. The 2014 Credit Agreement was amended to, among other things:
On September 18, 2018, we entered into an amendment to the 2017 Credit Agreement. The 2017 Credit Agreement was amended to, among other things:
Other
At September 30, 2018, we were in compliance with all financial and other debt covenants.
All obligations under our 2014 Revolving Credit Facility, 2017 Credit Agreement and 2016 Credit Agreement (collectively, Credit Facilities) as well as our Second Lien Notes and Senior Notes are guaranteed both fully and unconditionally and jointly and severally by all of our material wholly owned subsidiaries.
A one-eighth percent change in the variable interest rates on the borrowings under our Credit Facilities on September 30, 2018 would result in a $3 million change in annual interest expense. |
JOINT VENTURES |
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JOINT VENTURES | NOTE 6 JOINT VENTURES
Noncontrolling Interests
The following table presents the changes in noncontrolling interests by joint venture partners (described in greater detail below), reported in equity and mezzanine equity on the condensed consolidated balance sheets, for the nine months ended September 30, 2018 (in millions):
Ares Management L.P. (Ares)
In February 2018, we entered into a midstream JV with ECR Corporate Holdings L.P. (ECR), a portfolio company of Ares Management L.P. (Ares). This JV (Ares JV) holds the Elk Hills power plant ( a 550-megawatt natural gas fired power plant) and a 200 million cubic foot per day cryogenic gas processing plant. We hold 50% of the Class A common interest and 95.25% of the Class C common interest in the Ares JV. ECR holds 50% of the Class A common interest, 100% of the Class B preferred interest and 4.75% of the Class C common interest. We received $750 million in proceeds upon entering into the Ares JV, before $3 million for transaction costs.
The Class A common and Class B preferred interests held by ECR are reported as redeemable noncontrolling interest in mezzanine equity due to an embedded optional redemption feature. The Class C common interest held by ECR is reported in equity on our condensed consolidated balance sheets.
The Ares JV is required to make monthly distributions to the Class B holders. The Class B preferred interest has a deferred payment feature whereby a portion of the monthly distributions may be deferred for the first three years to the fourth and fifth year. The deferred amounts accrue an additional return. Distributions to the Class B preferred interest holders are reported as a reduction to mezzanine equity on our condensed consolidated balance sheets. Monthly, the Ares JV is also required to distribute its excess cash flow over its working capital requirements to the Class C common interests, on a pro-rata basis.
We can cause the Ares JV to redeem ECR's Class A and Class B interests, in whole, but not in part, at any time by paying $750 million for the Class B interest and $60 million for the Class A interest, plus any previously accrued but unpaid preferred distributions and a make-whole payment if the redemption happens prior to five years from inception. We have the option to extend the redemption period for up to an additional two and one-half years, in which case the interests can be redeemed for $750 million for the Class B interest and $80 million for the Class A interest, plus any previously accrued but unpaid preferred distributions and a make-whole payment if the redemption happens prior to seven and one-half years from inception. If we do not cause a redemption at the end of the seven and one-half year period, ECR can either sell its Class A and Class B interests or cause the sale or lease of the Ares JV assets.
Our condensed consolidated statements of operations reflect the full operations of our Ares JV, with ECR's share of net income reported in net income attributable to noncontrolling interests.
Additionally, in the first quarter of 2018, an Ares-led investor group purchased approximately 2.3 million shares of our common stock in a private placement for an aggregate purchase price of $50 million.
Benefit Street Partners (BSP)
In February 2017, we entered into a joint venture with BSP (BSP JV) where BSP will contribute up to $250 million, subject to agreement of the parties, in exchange for a preferred interest in the BSP JV. BSP is entitled to preferential distributions and, if BSP receives cash distributions equal to a predetermined threshold, the preferred interest is automatically redeemed in full with no additional payment. BSP funded $150 million in three equal tranches, before transaction costs, in March 2017, July 2017 and June 2018. The funds contributed by BSP are used to develop certain of our oil and gas properties.
The BSP JV holds net profits interests (NPI) in existing and future cash flow from certain of our properties and the proceeds from the NPI are used by the BSP JV to (1) pay quarterly minimum distributions to BSP, (2) pay for development costs within the project area, upon mutual agreement between members, and (3) make distributions to BSP until the predetermined threshold is achieved.
Our consolidated results reflect the full operations of our BSP JV, with BSP's share of net income being reported in net income attributable to noncontrolling interests on our condensed consolidated statements of operations.
Other
Macquarie Infrastructure and Real Assets Inc. (MIRA)
Our consolidated results include our working interest share in a joint venture we entered into with Macquarie Infrastructure and Real Assets Inc. (MIRA) in April 2017. Subject to the agreement of the parties, MIRA will invest up to $300 million to develop certain of our oil and gas properties in exchange for a 90% working interest in the related properties. MIRA will fund 100% of the development cost of such properties. Our 10% working interest increases to 75% if MIRA receives cash distributions equal to a predetermined threshold return. MIRA initially committed $160 million. In June 2018, the parties amended the initial joint development program to $140 million. The agreement provides for a commitment of up to 110% of the program amount. MIRA invested $58 million in 2017 and $46 million in the nine months ended September 30, 2018. MIRA expects to contribute $11 million for drilling projects in the fourth quarter of 2018 and the balance of the committed amount in 2019.
Subsequent Events
In October 2018, we entered into three joint ventures where our partners carry a portion of our costs. The JV partners have committed capital of approximately $35 million and could provide additional capital if certain milestones are met. We have committed $13 million over a three-year period in connection with these joint ventures. |
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ACQUISITIONS AND DIVESTITURES | NOTE 7 ACQUISITIONS AND DIVESTITURES
Acquisitions
On April 9, 2018, we acquired the remaining working, surface and mineral interests in the 47,000-acre Elk Hills unit from Chevron U.S.A., Inc. (Chevron) (the Elk Hills transaction) for approximately $518 million, including $7 million of liabilities assumed relating to asset retirement obligations and favorable customary purchase price adjustments of $2 million. We accounted for the Elk Hills transaction as a business combination. After the transaction, we hold all of the working, surface and mineral interests in the Elk Hills unit. The effective date of the transaction was April 1, 2018.
As part of the Elk Hills transaction, Chevron reduced its royalty interest in one of our oil and gas properties by half and extended the time frame to invest the remainder of our capital commitment on that property by two years, to the end of 2020. As of September 30, 2018, the remaining commitment was approximately $18 million. Any deficiency in meeting this capital investment obligation will be paid in cash. We expect to fulfill the capital investment requirement within the extended period. In addition, the parties mutually agreed to release each other from pending claims with respect to the Elk Hills unit.
The following table summarizes the total consideration, including customary closing adjustments, and the allocation of the consideration based on the fair value of the assets acquired as of the acquisition date (in millions):
The results of operations for the Elk Hills transaction were included in our condensed consolidated financial statements subsequent to the closing date.
On April 2, 2018, we acquired an office building in Bakersfield, California for $48.4 million, which we believe is significantly less than the estimated replacement value of the property and the land. We currently have approximately 500 employees using eight different locations in Bakersfield across multiple leases. We expect that the new building will create significant value by bringing our Bakersfield employees together into a single location over the next 12 to 15 months, which will increase the efficiency, effectiveness and collaboration of these employees. This building was the only available office space in the Bakersfield area large enough to allow us to consolidate our workforce into a single location. For the initial eight months, a former owner of the building will occupy most of the space as a tenant, from which we expect to generate rental income of approximately $4 million in 2018. In December 2018, this tenant will downsize the space they are leasing, with a corresponding reduction in rent, until December 2022. The vacated space will be available to lease to other tenants to generate additional income. In addition, the unimproved land may be monetized in the future. Approximately $6 million of the purchase price was allocated to the in-place leases, which is included in other assets and is being amortized into other expenses, net.
Divestitures
During the nine months ended September 30, 2018, we divested non-core assets resulting in $17 million of proceeds and a $4 million gain. During the nine months ended September 30, 2017, we divested non-core assets resulting in $33 million of proceeds and a $21 million gain. |
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES |
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LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | |
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | NOTE 8 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES
We, or certain of our subsidiaries, are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief.
We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Reserve balances at September 30, 2018 and December 31, 2017 were not material to our condensed consolidated balance sheets as of such dates. We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters. We believe that reasonably possible losses that we could incur in excess of reserves accrued would not be material to our consolidated financial position or results of operations.
We have indemnified various parties against specific liabilities those parties might incur in the future in connection with the Spin-off, purchases and other transactions that they have entered into with us. These indemnities include indemnities made to Occidental against certain tax-related liabilities that may be incurred by Occidental relating to the Spin-off and liabilities related to operation of our business while it was still owned by Occidental. As of September 30, 2018, we are not aware of material indemnity claims pending or threatened against the company.
In October 2018, we settled the examination by the Internal Revenue Service (IRS) of our U.S. federal income tax returns for the post-Spin-off period in 2014 and calendar year 2015. There were no changes to our tax filings as a result of the examination. We remain subject to examination by the IRS for calendar years 2016 and 2017 as well as for all periods subsequent to the Spin-off by the state of California.
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DERIVATIVES |
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DERIVATIVES | NOTE 9 DERIVATIVES
General
We use a variety of derivative instruments to protect our cash flow, operating margin and capital program from the cyclical nature of commodity prices. These derivatives are intended to help us maintain adequate liquidity and improve our ability to comply with the covenants of our Credit Facilities in case of price deterioration. We will continue to be strategic and opportunistic in implementing our hedging program as market conditions permit. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty.
Commodity Contracts
As of September 30, 2018, we did not have any derivatives designated as hedges. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to achieve our hedging program goals, even though they are not necessarily accounted for as cash-flow or fair-value hedges. As part of our hedging program, we entered into a number of derivative transactions that resulted in the following Brent-based crude oil contracts as of September 30, 2018:
Note: Additional hedges for 2019 and 2020 were put in place after September 30, 2018 that are not included in the table above.
The BSP JV entered into crude oil derivatives that are included in our consolidated results but not in the above table. The hedges entered into by the BSP JV could affect the timing of the redemption of the JV interest. The BSP JV sold calls for up to approximately 1,000 barrels per day at a weighted-average price per barrel of $60.00 per barrel for 2018 through 2020. The BSP JV purchased puts for up to approximately 2,000 barrels per day at a weighted-average price per barrel of approximately $50.00 for 2018 through 2021. This joint venture also entered into natural gas swaps for insignificant volumes for periods through May 2021.
The outcomes of the derivative instruments are as follows:
From time to time, we may use combinations of these and other derivative instruments to increase the efficacy of our commodity hedging program.
Interest-Rate Contracts
In May 2018, we entered into derivative contracts that limit our interest rate exposure with respect to $1.3 billion of our variable-rate indebtedness. These interest-rate contracts reset monthly and require the counterparties to pay any excess interest owed on such amount in the event the one-month LIBOR exceeds 2.75% for any monthly period prior to May 4, 2021.
Fair Value of Derivatives
Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented. We recognize fair value changes on derivative instruments in each reporting period. The changes in fair value result from new positions and settlements that occurred during the period, as well as the relationship between contract prices or interest rates and the associated forward curves.
Commodity Contracts
The following table presents the fair values (at gross and net) of our outstanding commodity derivatives as of September 30, 2018 and December 31, 2017 (in millions):
Interest-Rate Contracts
As of September 30, 2018, we reported the fair value of our interest rate derivatives of $9 million in other assets on our condensed consolidated balance sheets. For the three months ended September 30, 2018, we reported a $1 million gain on these contracts in other non-operating expense on our condensed consolidated statements of operations. |
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EARNINGS PER SHARE | NOTE 10 EARNINGS PER SHARE
We compute basic and diluted earnings per share (EPS) using the two-class method required for participating securities. Certain of our restricted and performance stock awards are considered participating securities because they have non-forfeitable dividend rights at the same rate as our common stock.
Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to common stock in determining net income available to common stockholders. In loss periods, no allocation is made to participating securities because participating securities do not share in losses. For basic EPS, the weighted-average number of common shares outstanding excludes outstanding shares related to unvested restricted stock awards. For diluted EPS, the basic shares outstanding are adjusted by adding all potentially dilutive securities.
The following table presents the calculation of basic and diluted EPS for the three and nine months ended September 30, 2018 and 2017:
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PENSION AND POSTRETIREMENT BENEFIT PLANS |
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PENSION AND POSTRETIREMENT BENEFIT PLANS | NOTE 11 PENSION AND POSTRETIREMENT BENEFIT PLANS
The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans:
We contributed $6 million and $1, respectively, to our defined benefit pension plans in the three months ended September 30, 2018 and 2017. We contributed $8 million and $6 million, respectively, to our defined benefit pension plans in the nine months ended September 30, 2018 and 2017. We do not expect to make any additional contributions to our defined benefit plans during the remainder of 2018. The 2018 and 2017 settlement losses were associated with early retirements. |
REVENUE RECOGNITION |
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REVENUE RECOGNITION | NOTE 12 REVENUE RECOGNITION
We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the modified retrospective method, which was applied to all contracts that were not completed as of that date. Prior period results were not adjusted and continue to be reported under the accounting standards in effect for the prior period. The new standard did not affect the timing of our revenue recognition and did not impact net income; accordingly, we did not record an adjustment to the opening balance of retained earnings.
We derive substantially all of our revenue from sales of oil, natural gas and natural gas liquids (NGLs), with the remaining revenue generated from sales of electricity and marketing activities related to storage and managing excess pipeline capacity.
The following is a description of our principal activities from which we generate revenue. Revenues are recognized when control of promised goods is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods.
Commodity Sales Contracts
We recognize revenue from the sale of our oil, natural gas and NGL production when delivery has occurred and control passes to the customer. Our commodity contracts are short term, typically less than a year. We consider our performance obligations to be satisfied upon transfer of control of the commodity. In certain instances, transportation and processing fees are incurred by us prior to control being transferred to customers. These costs were previously offset against oil and gas sales. Upon adoption of ASC 606, we are recording these costs as a component of other expenses, net on our condensed consolidated statements of operations.
Our commodity sales contracts are indexed to a market price or an average index price. We recognize revenue in the amount that we have a right to invoice once we are able to adequately estimate the consideration (i.e., when market prices are known). Our contracts with customers typically require payment within 30 days following invoicing.
Electricity
The electrical output of the Elk Hills power plant that is not used in our operations is sold to the wholesale power market and to a utility under a power purchase and sales agreement, which includes a capacity payment. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs upon delivery of the electricity. We report electricity sales as other revenue on our condensed consolidated statements of operations. Revenue is measured as the amount of consideration we expect to receive based on average index pricing with payment due the month following delivery. Capacity payments are based on a fixed annual amount per kilowatt hour and monthly rates vary based on seasonality, which is consistent with how we earn the capacity payment. Capacity payments are settled monthly. We consider our performance obligations to be satisfied upon delivery of electricity or as the contracted amount of energy is made available to the customer in the case of capacity payments.
Marketing, Trading and Other
Marketing, trading and other revenue primarily includes our activities associated with storing, transporting and marketing our production as well as third-party volumes.
To transport our natural gas as well as third-party volumes, we have entered into firm pipeline commitments. Depending on market conditions, we may have excess capacity, in which case we may enter into natural gas purchase and sale agreements with third parties. We consider our performance obligations to be satisfied upon transfer of control of the commodity. We have not incurred any significant fees or penalties related to excess capacity on these commitments.
We report our marketing and trading activities on a gross basis with purchases and costs reported in other expenses, net and sales recorded in other revenue on our condensed consolidated statements of operations.
Disaggregation of Revenue
The following table provides disaggregated revenue for the three and nine months ended September 30, 2018 (in millions):
The impact of the adoption of ASC 606 on our condensed consolidated statements of operations for the three and nine months ended September 30, 2018 was as follows (in millions):
The adoption of ASC 606 did not have an impact on our condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017. |
INCOME TAXES |
9 Months Ended |
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INCOME TAXES | |
INCOME TAXES | NOTE 13 INCOME TAXES
For the three and nine months ended September 30, 2018 and 2017, we did not provide any current or deferred tax provision or benefit. The difference between our statutory tax rate and our effective tax rate of zero for the periods presented includes changes to maintain our full valuation allowance against our net deferred tax assets given our recent and anticipated future earnings trends. We believe that there is a reasonable possibility that some or all of this allowance could be released in the foreseeable future. However, the amount of the net deferred tax assets considered realizable depends on the level of profitability that we are able to actually achieve.
The Tax Cuts and Jobs Act was signed into law on December 22, 2017 and included significant changes to corporate tax provisions such as a reduction in the corporate tax rate, limitations on certain corporate deductions and favorable capital recovery provisions. The California Franchise Tax Board released its summary of Federal Income Tax Changes for 2017 on April 19, 2018, which identified how these U.S. federal changes interact with California law. California law was not conformed to the corporate provisions that are the most significant to our business. |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION | NOTE 14 CONDENSED CONSOLIDATING FINANCIAL INFORMATION
Our Credit Facilities, Second Lien Notes and Senior Notes are guaranteed both fully and unconditionally and jointly and severally by our material wholly owned subsidiaries (Guarantor Subsidiaries). Certain of our subsidiaries do not guarantee our Credit Facilities, Second Lien Notes and Senior Notes (Non-Guarantor Subsidiaries) either because they hold assets that are less than 1% of our total consolidated assets or because they are not considered a "subsidiary" under the applicable financing agreement. The following condensed consolidating balance sheets as of September 30, 2018 and December 31, 2017 and the condensed consolidating statements of operations and statements of cash flows for the three and nine months ended September 30, 2018 and 2017, as applicable, reflect the condensed consolidating financial information of our parent company, CRC (Parent), our combined Guarantor Subsidiaries, our combined Non-Guarantor Subsidiaries and the elimination entries necessary to arrive at the information for CRC on a consolidated basis.
The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantor Subsidiaries operated as independent entities.
Condensed Consolidating Balance Sheets
Condensed Consolidating Statements of Operations
Condensed Consolidating Statements of Operations
Condensed Consolidating Statements of Cash Flows
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THE SPIN-OFF AND BASIS OF PRESENTATION (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
THE SPIN-OFF AND BASIS OF PRESENTATION | |
Basis of Presentation | Basis of Presentation
In the opinion of our management, the accompanying financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position as of September 30, 2018 and December 31, 2017 and the statements of operations, comprehensive income, cash flows and equity for the three and nine months ended September 30, 2018 and 2017, as applicable. We have eliminated all significant intercompany transactions and accounts. We account for our share of oil and gas exploration and production ventures in which we have a direct working interest by reporting our proportionate share of assets, liabilities, revenues, costs and cash flows within the relevant lines on our balance sheets, statements of operations and cash flows.
We have prepared this report pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC) applicable to interim financial information, which permit the omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information not misleading. This Form 10-Q should be read in conjunction with the consolidated financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2017.
Certain prior year amounts have been reclassified to conform to the 2018 presentation. On the statements of operations, we reclassified interest cost, expected return on assets, amortization of prior service costs and settlements/curtailments, all associated with defined benefit pension plans, from general and administrative expenses to other non-operating expenses, net in accordance with new accounting rules. See Note 2 Accounting and Disclosure Changes for more information. |
OTHER INFORMATION (Tables) |
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Schedule of other current assets, net |
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Schedule of accrued liabilities |
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Schedule of Inventories |
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DEBT (Tables) |
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DEBT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt |
Note: For a detailed description of our credit agreements, second lien notes and senior notes, please see our most recent Form 10-K for the year ended December 31, 2017.
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JOINT VENTURES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
JOINT VENTURES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in noncontrolling interests |
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ACQUISITIONS AND DIVESTITURES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Elk Hills | |||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DIVESTITURES | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of total consideration, including customary closing adjustments, and allocation of the consideration based on fair value of assets acquired as of acquisition date | The following table summarizes the total consideration, including customary closing adjustments, and the allocation of the consideration based on the fair value of the assets acquired as of the acquisition date (in millions):
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DERIVATIVES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of oil hedge positions |
Note: Additional hedges for 2019 and 2020 were put in place after September 30, 2018 that are not included in the table above.
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Schedule of fair value (at gross and net) of outstanding derivatives | The following table presents the fair values (at gross and net) of our outstanding commodity derivatives as of September 30, 2018 and December 31, 2017 (in millions):
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EARNINGS PER SHARE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of basic and diluted EPS |
Anti-dilutive shares represent potentially dilutive securities that are excluded from the computation of diluted EPS. In periods of income, anti-dilutive shares primarily include the effect of out-of-the-money stock options. In periods of loss, anti-dilutive shares include stock options and unvested awards. |
PENSION AND POSTRETIREMENT BENEFIT PLANS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND POSTRETIREMENT BENEFIT PLANS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the net periodic benefit costs |
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REVENUE RECOGNITION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue recognition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregated revenue | The following table provides disaggregated revenue for the three and nine months ended September 30, 2018 (in millions):
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ASU 2014-09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue recognition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the impact of the adoption of ASC 606 on our condensed consolidated statements of operations | The impact of the adoption of ASC 606 on our condensed consolidated statements of operations for the three and nine months ended September 30, 2018 was as follows (in millions):
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheets
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Schedule of Condensed Consolidating statement of Operations |
Condensed Consolidating Statements of Operations
Condensed Consolidating Statements of Operations
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Schedule of Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statements of Cash Flows
|
THE SPIN-OFF AND BASIS OF PRESENTATION - Separation and Spin off (Details) |
Nov. 30, 2014 |
---|---|
Occidental Petroleum | |
Separation and Spin Off Transactions | |
Percentage of outstanding shares of common stock initially retained by Occidental | 18.50% |
OTHER INFORMATION (Details) - USD ($) shares in Thousands, $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Cash restricted under our joint venture agreements | $ 13 | $ 5 | |
Amounts due from joint interest partners | 87 | 76 | |
Derivative assets from commodities contracts | 34 | 23 | |
Prepaid expenses | 23 | 19 | |
Asset held for sale | 12 | ||
Other | 9 | ||
Other current assets, net | 153 | 130 | |
Derivative liabilities from commodities contracts | 191 | 154 | |
Accrued taxes other than on income | 65 | 130 | |
Accrued employee-related costs | 106 | 86 | |
Accrued interest | 60 | 23 | |
Other | 100 | 82 | |
Accrued liabilities | 522 | 475 | |
Interest paid, net of capitalized amounts | $ 278 | $ 249 | |
Chevron | |||
Stock issued in connection with acquisition ( in shares ) | 2,850 | ||
Value of common stock at issuance | $ 51 | ||
Other long-term liabilities | |||
Non-current asset retirement obligation | $ 417 | $ 403 |
INVENTORIES (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
INVENTORIES | ||
Materials and supplies | $ 64 | $ 53 |
Finished goods | 5 | 3 |
Total | $ 69 | $ 56 |
DEBT - Schedule of long-term debt (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Debt | ||
Long-term debt | $ 5,108 | $ 5,306 |
2014 Revolving Credit Facility (Shared First Priority Lien) | ||
Debt | ||
Long-term debt | $ 342 | $ 363 |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on LIBOR loans | Minimum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 3.25% | 3.25% |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on LIBOR loans | Maximum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 4.00% | 4.00% |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | Minimum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 2.25% | 2.25% |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | Maximum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 3.00% | 3.00% |
2017 Credit Agreement (Shared First Priority Lien) | ||
Debt | ||
Long-term debt | $ 1,300 | $ 1,300 |
2017 Credit Agreement (Shared First Priority Lien) | 91 days prior to maturity of 2016 Credit Agreement | ||
Debt | ||
Period before maturity of the 2016 Credit Agreement notes that triggers accelerated payment | 91 days | 91 days |
Outstanding amount of 2016 Credit Agreement notes that triggers accelerated payment | $ 100 | $ 100 |
2017 Credit Agreement (Shared First Priority Lien) | Applicable margin on LIBOR loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 4.75% | 4.75% |
2017 Credit Agreement (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 3.75% | 3.75% |
2016 Credit Agreement (Shared First Priority Lien) | ||
Debt | ||
Long-term debt | $ 1,000 | $ 1,000 |
2016 Credit Agreement (Shared First Priority Lien) | Applicable margin on LIBOR loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 10.375% | 10.375% |
2016 Credit Agreement (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 9.375% | 9.375% |
Second Lien Notes (Second Priority Lien) | ||
Debt | ||
Long-term debt | $ 2,122 | $ 2,250 |
Debt instrument interest rate stated percentage | 8.00% | 8.00% |
Principal amount due by June 2021 | $ 335 | |
Principal amount due by December 2021 | 67 | |
Principal amount due by June 2022 | 70 | |
Senior Notes (Unsecured) | 5% Notes Due 2020 | ||
Debt | ||
Long-term debt | $ 100 | $ 100 |
Debt instrument interest rate stated percentage | 5.00% | 5.00% |
Senior Notes (Unsecured) | 5.5% Notes Due 2021 | ||
Debt | ||
Long-term debt | $ 100 | $ 100 |
Debt instrument interest rate stated percentage | 5.50% | 5.50% |
Senior Notes (Unsecured) | 6% Senior Notes due 2024 | ||
Debt | ||
Long-term debt | $ 144 | $ 193 |
Debt instrument interest rate stated percentage | 6.00% | 6.00% |
DEBT - Deferred Gain and Issuance Costs (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
DEBT | ||
Net deferred gain and issuance costs | $ 253 | $ 287 |
Deferred gains | 357 | 415 |
Deferred issuance costs and original issue discounts | $ 104 | $ 128 |
DEBT - 2014 Revolving Credit Facility (Details) - 2014 Revolving Credit Facility - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Oct. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Debt | |||
Available borrowing capacity, subject to minimum liquidity requirement | $ 490 | ||
Minimum month end liquidity | 150 | ||
Borrowing base | $ 2,300 | ||
Letters of Credit | |||
Debt | |||
Maximum sub-limit on borrowing capacity for issuance of letters of credit | 400 | $ 400 | |
Aggregate letters of credit issued | $ 167 | $ 148 |
DEBT - Note Repurchases (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Second Lien Notes and 6% Senior Notes due 2024 | |||
Repurchases of debt | |||
Repurchase value of the principal amounts | $ 30 | $ 149 | |
Pre-tax gain on extinguishment of debt, net of a reduction in deferred issuance costs | 2 | 26 | |
Second Lien Notes (Second Priority Lien) | |||
Repurchases of debt | |||
Principal amount of debt reduction through payment or repurchase | $ 31 | $ 128 | |
Debt instrument interest rate stated percentage | 8.00% | 8.00% | 8.00% |
Senior Notes (Unsecured) | 6% Senior Notes due 2024 | |||
Repurchases of debt | |||
Principal amount of debt reduction through payment or repurchase | $ 1 | $ 49 | |
Debt instrument interest rate stated percentage | 6.00% | 6.00% | 6.00% |
DEBT - Fair Value (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
DEBT | ||
Estimated fair value of long-term debt | $ 5,000 | $ 4,800 |
Debt carrying value | $ 5,108 | $ 5,306 |
DEBT - Amendments (Details) - 2014 Revolving Credit Facility - USD ($) $ in Millions |
Aug. 20, 2018 |
Aug. 19, 2018 |
---|---|---|
Debt | ||
Amount that can be drawn to repurchase Second Lien Notes and Senior Notes at a discount to par | $ 300 | |
Minimum liquidity to repurchase indebtedness | $ 300 | $ 250 |
DEBT - Other (Details) - Credit Agreements $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Debt | |
Percentage of change in the variable interest rates | 0.125% |
Effect of 1/8 percent change in annual interest expense | $ 3 |
JOINT VENTURES - Changes in Noncontrolling Interests (Details) - USD ($) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||
Beginning balance | $ (720) | $ (557) | |||
Contributions from noncontrolling interest holders, net | 82 | [1] | 98 | ||
Distributions paid to noncontrolling interest holders | (40) | [1] | (6) | ||
Ending balance | (605) | [1] | (574) | ||
Equity Attributable to Noncontrolling Interest | |||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||
Beginning balance | 94 | ||||
Net income (loss) attributable to noncontrolling interest | (16) | ||||
Contributions from noncontrolling interest holders, net | 82 | 98 | |||
Distributions paid to noncontrolling interest holders | (40) | (6) | |||
Ending balance | 120 | $ 93 | |||
Equity Attributable to Noncontrolling Interest | Ares JV | |||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||
Beginning balance | 0 | ||||
Net income (loss) attributable to noncontrolling interest | (8) | ||||
Contributions from noncontrolling interest holders, net | 33 | ||||
Distributions paid to noncontrolling interest holders | (5) | ||||
Ending balance | 20 | ||||
Equity Attributable to Noncontrolling Interest | BSP JV | |||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||
Beginning balance | 94 | ||||
Net income (loss) attributable to noncontrolling interest | (8) | ||||
Contributions from noncontrolling interest holders, net | 49 | ||||
Distributions paid to noncontrolling interest holders | (35) | ||||
Ending balance | $ 100 | ||||
|
JOINT VENTURES - Mezzanine Equity (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Mezzanine Equity - Redeemable Noncontrolling Interest - Ares | |
Balance | $ 745 |
Mezzanine Equity - Redeemable Noncontrolling Interest | |
Mezzanine Equity - Redeemable Noncontrolling Interest - Ares | |
Net income (loss) attributable to noncontrolling interest | 71 |
Contributions from noncontrolling interest holders, net | 714 |
Distributions to noncontrolling interest holders | (40) |
Balance | $ 745 |
JOINT VENTURES - Ares (Details) shares in Millions, $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | |
---|---|---|---|---|
Feb. 28, 2018
USD ($)
MW
MMcf
|
Mar. 31, 2018
USD ($)
shares
|
Sep. 30, 2018
USD ($)
shares
|
Sep. 30, 2017
USD ($)
|
|
JOINT VENTURES | ||||
Net proceeds received by CRC from the transaction | $ 796 | $ 98 | ||
Ares JV | ||||
JOINT VENTURES | ||||
Net proceeds received by CRC from the transaction | $ 750 | |||
Joint venture transaction cost | $ 3 | |||
Ares JV | Ares-led investor group | ||||
JOINT VENTURES | ||||
CRC shares issued to Ares-led investor group in a private placement | shares | 2.3 | 2.3 | ||
Purchase price of the CRC shares issued to Ares-led investor group in a private placement | $ 50 | |||
Class A common interest | Ares JV | ||||
JOINT VENTURES | ||||
Period in which monthly distributions can be deferred | 3 years | |||
Natural gas power and Gas processing plants | Ares JV | ||||
JOINT VENTURES | ||||
Power plant capacity | MW | 550 | |||
Gas processing plant capacity | MMcf | 200 | |||
ECR Corporate Holdings L.P. | Class A common interest | Ares JV | ||||
JOINT VENTURES | ||||
Percentage of common interest held by ECR | 50.00% | |||
ECR Corporate Holdings L.P. | Class B preferred interest | Ares JV | ||||
JOINT VENTURES | ||||
Percentage of common interest held by ECR | 100.00% | |||
ECR Corporate Holdings L.P. | Class C common interest | Ares JV | ||||
JOINT VENTURES | ||||
Percentage of common interest held by ECR | 4.75% | |||
ECR | Redemption prior to fifth year | ||||
JOINT VENTURES | ||||
Redemption period | 5 years | |||
ECR | Redemption prior to fifth year | Class A common interest | ||||
JOINT VENTURES | ||||
Redemption price | $ 60 | |||
ECR | Redemption prior to fifth year | Class B preferred interest | ||||
JOINT VENTURES | ||||
Redemption price | $ 750 | |||
ECR | Redemption prior to seven and a half years | ||||
JOINT VENTURES | ||||
Maximum extension period of redemption | 2 years 6 months | |||
Make-whole payment redemption period | 7 years 6 months | |||
ECR | Redemption prior to seven and a half years | Class A common interest | ||||
JOINT VENTURES | ||||
Redemption price | $ 80 | |||
ECR | Redemption prior to seven and a half years | Class B preferred interest | ||||
JOINT VENTURES | ||||
Redemption price | $ 750 | |||
Ares JV | Class A common interest | ||||
JOINT VENTURES | ||||
Percentage of common interest held by CRC | 50.00% | |||
Ares JV | Class C common interest | ||||
JOINT VENTURES | ||||
Percentage of common interest held by CRC | 95.25% |
JOINT VENTURES - BSP (Details) - Joint venture with BSP - BSP JV $ in Millions |
16 Months Ended | |
---|---|---|
Jun. 30, 2018
USD ($)
item
|
Feb. 28, 2017
USD ($)
|
|
JOINT VENTURES | ||
Maximum commitment contribution | $ 250 | |
Commitment contributed | $ 150 | |
Number of equal funding | item | 3 |
JOINT VENTURES - MIRA (Details) - Joint venture with MIRA - MIRA $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Apr. 30, 2017
USD ($)
|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
JOINT VENTURES | |||||
Maximum commitment contribution | $ 300 | ||||
Working interest acquired by MIRA (as a percent) | 90.00% | ||||
Funding provided by MIRA for development of properties (as a percent) | 100.00% | ||||
Working interest retained by CRC (as a percent) | 10.00% | ||||
CRC's working interest if MIRA receives cash distributions equal to a predetermined threshold return (as a percent) | 75.00% | ||||
Initial commitment | $ 160 | ||||
Reduced commitment amount | $ 140 | ||||
Maximum percentage of program amount | 110 | ||||
Commitment contributed | $ 46 | $ 58 | |||
Expected | |||||
JOINT VENTURES | |||||
Commitment contributed | $ 11 |
JOINT VENTURES - Subsequent Events (Details) - Subsequent Events $ in Millions |
1 Months Ended |
---|---|
Oct. 31, 2018
USD ($)
item
| |
JOINT VENTURES | |
Number of joint ventures entered into | item | 3 |
Maximum commitment contribution | $ 13 |
Investment commitment period | 3 years |
Exploration joint ventures partners | |
JOINT VENTURES | |
Maximum commitment contribution | $ 35 |
ACQUISITIONS AND DIVESTITURES - Elk Hills Transaction Paragraph (Details) $ in Millions |
9 Months Ended | |
---|---|---|
Apr. 09, 2018
USD ($)
a
|
Sep. 30, 2018
USD ($)
|
|
Working, surface and mineral interests in the Elk Hills field | ||
ACQUISITIONS AND DIVESTITURES | ||
Area of land | a | 47,000 | |
Purchase price | $ 518 | |
Liabilities assumed | 7 | |
Purchase price adjustment | $ 2 | |
Other oil and gas property | ||
ACQUISITIONS AND DIVESTITURES | ||
Reduction of Chevron royalty interest in one of CRCs oil and gas properties | 50.00% | |
Extension period capital commitment | 2 years | |
Other oil and gas property | Capital commitment | ||
ACQUISITIONS AND DIVESTITURES | ||
Long-term Purchase Commitment, Amount | $ 18 |
ACQUISITIONS AND DIVESTITURES - Elk Hills Table (Details) - Working, surface and mineral interests in the Elk Hills field shares in Thousands, $ in Millions |
Apr. 09, 2018
USD ($)
shares
|
---|---|
Consideration: | |
Cash | $ 462 |
Purchase price adjustment | (2) |
Common stock issued (2.85 million shares) | 51 |
Liabilities assumed | 7 |
Consideration | $ 518 |
Stock issued in connection with acquisition ( in shares ) | shares | 2,850 |
Identifiable assets acquired: | |
Proved properties | $ 435 |
Other property and equipment | 77 |
Materials and supplies | 6 |
Recognized amounts of identifiable assets acquired | $ 518 |
ACQUISITIONS AND DIVESTITURES - Office Building (Details) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Apr. 02, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
location
employee
|
Dec. 31, 2018
USD ($)
|
|
ACQUISITIONS AND DIVESTITURES | |||
Acquisition cost | $ 514.0 | ||
Number of employees in Bakersfield | employee | 500 | ||
Number of different locations in Bakersfield | location | 8 | ||
Amount allocated to in-place leases | $ 6.0 | ||
Minimum | |||
ACQUISITIONS AND DIVESTITURES | |||
Expected period to bring all Bakersfield employees into single location | 12 months | ||
Maximum | |||
ACQUISITIONS AND DIVESTITURES | |||
Expected period to bring all Bakersfield employees into single location | 15 months | ||
Office building | |||
ACQUISITIONS AND DIVESTITURES | |||
Acquisition cost | $ 48.4 | ||
Term of occupying space as a tenant by former owner | 8 months | ||
Office building | Expected | |||
ACQUISITIONS AND DIVESTITURES | |||
Rental income expected | $ 4.0 |
ACQUISITIONS AND DIVESTITURES - Divestitures (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Divestitures | |||
Proceeds from sale of non-core assets | $ 17 | $ 33 | |
Gain on non-core assets divestitures | $ 3 | $ 4 | $ 21 |
DERIVATIVES - Commodity Contracts (Details) |
Sep. 30, 2018
bbl / d
$ / bbl
bbl
|
---|---|
Calls | Purchased | Q1 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 2,000 |
Weighted-average price (in dollars per barrel) | 71.00 |
Calls | Sold | Q4 2018 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 15,000 |
Weighted-average price (in dollars per barrel) | 58.83 |
Calls | Sold | Q1 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 15,000 |
Weighted-average price (in dollars per barrel) | 66.15 |
Calls | Sold | Q2 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 5,000 |
Weighted-average price (in dollars per barrel) | 68.45 |
Puts | Purchased | Q1 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 33,000 |
Weighted-average price (in dollars per barrel) | 63.48 |
Puts | Purchased | Q2 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 35,000 |
Weighted-average price (in dollars per barrel) | 68.29 |
Puts | Purchased | Q3 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 30,000 |
Weighted-average price (in dollars per barrel) | 71.67 |
Puts | Purchased | Q4 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 20,000 |
Weighted-average price (in dollars per barrel) | 75.00 |
Puts | Sold | Q4 2018 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 19,000 |
Weighted-average price (in dollars per barrel) | 45.00 |
Puts | Sold | Q1 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 35,000 |
Weighted-average price (in dollars per barrel) | 50.71 |
Puts | Sold | Q2 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 30,000 |
Weighted-average price (in dollars per barrel) | 55.00 |
Puts | Sold | Q3 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 30,000 |
Weighted-average price (in dollars per barrel) | 56.67 |
Puts | Sold | Q4 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 20,000 |
Weighted-average price (in dollars per barrel) | 60.00 |
Swaps | Q4 2018 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 48,000 |
Weighted-average price (in dollars per barrel) | 60.35 |
Swaps | Q1 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 7,000 |
Weighted-average price (in dollars per barrel) | 67.71 |
Maximum increase in volume per quarter of crude oil counter-party swaps (in barrels per day) | bbl | 5,000 |
Weighted-average Brent price (in dollars per barrel) | 70.00 |
DERIVATIVES - BSP JV (Details) - Purchased |
Sep. 30, 2018
bbl / d
$ / bbl
|
---|---|
Puts | 2018 through 2021 | |
Derivatives | |
Weighted-average price (in dollars per barrel) | $ / bbl | 50.00 |
BSP JV | Calls | 2018 through 2020 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 1,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 60.00 |
BSP JV | Puts | 2018 through 2021 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 2,000 |
DERIVATIVES - Interest Rate Contracts (Details) - Interest rate contract $ in Billions |
May 31, 2018
USD ($)
|
---|---|
Derivatives | |
Hedged amount for variable-rate indebtedness | $ 1.3 |
One month LIBOR | |
Derivatives | |
Interest rate to be in place to receive payment | 2.75% |
DERIVATIVES - Fair Value (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Interest Rate Contracts | ||
Fair Value of Derivatives | ||
Gain on interest rate contracts | $ 1 | |
Interest Rate Contracts | Other assets | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | 9 | |
Presented in the Balance Sheet | Commodity Contracts | ||
Fair Value of Derivatives | ||
Total derivatives | (153) | $ (133) |
Presented in the Balance Sheet | Commodity Contracts | Other current assets | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | 34 | 23 |
Presented in the Balance Sheet | Commodity Contracts | Other assets | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | 13 | 1 |
Presented in the Balance Sheet | Commodity Contracts | Accrued liabilities | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | (191) | (154) |
Presented in the Balance Sheet | Commodity Contracts | Other long-term liabilities | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | (9) | (3) |
Recognized Fair Value | Commodity Contracts | ||
Fair Value of Derivatives | ||
Total derivatives | (153) | (133) |
Recognized Fair Value | Commodity Contracts | Other current assets | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | 34 | 39 |
Gross Amounts Offset in the Balance Sheet | (16) | |
Recognized Fair Value | Commodity Contracts | Other assets | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | 13 | 1 |
Recognized Fair Value | Commodity Contracts | Accrued liabilities | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | (191) | (170) |
Gross Amounts Offset in the Balance Sheet | 16 | |
Recognized Fair Value | Commodity Contracts | Other long-term liabilities | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | $ (9) | $ (3) |
EARNINGS PER SHARE - Calculation of EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Basic EPS calculation | ||||
Net income (loss) | $ 91 | $ (132) | $ 37 | $ (127) |
Net income attributable to noncontrolling interests | (25) | (1) | (55) | (1) |
Net income (loss) attributable to common stock | 66 | (133) | (18) | (128) |
Less: net income allocated to participating securities | (1) | 0 | 0 | 0 |
Net income (loss) available to common stockholders | $ 65 | $ (133) | $ (18) | $ (128) |
Weighed-average common shares outstanding - basic | 48.5 | 42.7 | 47.0 | 42.5 |
Basic EPS (in dollars per share) | $ 1.34 | $ (3.11) | $ (0.38) | $ (3.01) |
Diluted EPS calculation | ||||
Net income (loss) | $ 91 | $ (132) | $ 37 | $ (127) |
Net income attributable to noncontrolling interests | (25) | (1) | (55) | (1) |
Net income (loss) attributable to common stock | 66 | (133) | (18) | (128) |
Less: net income allocated to participating securities | (1) | 0 | 0 | 0 |
Net (loss) income available to common stockholders | $ 65 | $ (133) | $ (18) | $ (128) |
Weighed-average common shares outstanding - basic | 48.5 | 42.7 | 47.0 | 42.5 |
Dilutive effect of potentially dilutive securities | 0.6 | |||
Weighted-average common shares outstanding - diluted | 49.1 | 42.7 | 47.0 | 42.5 |
Diluted EPS (in dollars per share) | $ 1.32 | $ (3.11) | $ (0.38) | $ (3.01) |
Weighted-average anti-dilutive shares | 1.1 | 2.5 | 2.8 | 2.6 |
PENSION AND POSTRETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Net periodic benefit costs: | ||||
Employer contributions to pension plan | $ 6 | $ 1 | $ 8 | $ 6 |
Pension Benefit | ||||
Net periodic benefit costs: | ||||
Service cost | 1 | 1 | ||
Interest cost | 1 | 1 | 2 | |
Expected return on plan assets | (1) | (1) | (2) | (2) |
Recognized actuarial loss | 1 | 1 | 1 | |
Settlement loss | 1 | 4 | 4 | |
Net periodic benefit costs | 1 | 5 | 6 | |
Postretirement Benefit | ||||
Net periodic benefit costs: | ||||
Service cost | 1 | 1 | 3 | 3 |
Interest cost | 1 | 1 | 3 | 3 |
Net periodic benefit costs | $ 2 | $ 2 | $ 6 | $ 6 |
REVENUE RECOGNITION - Commodity Sales Contracts and Marketing (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
REVENUE RECOGNITION | |
Term of payment following invoicing | 30 days |
REVENUE RECOGNITION - Disaggregation of revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Disaggregation of revenue | ||||
Revenue from contract with customers | $ 700 | $ 461 | $ 1,932 | $ 1,387 |
Other revenue | 182 | 49 | 313 | 113 |
Interest income | 1 | |||
Net derivative loss from commodity contracts | (54) | (65) | (259) | 51 |
Total revenues and other | 828 | $ 445 | 1,986 | $ 1,551 |
Oil | ||||
Disaggregation of revenue | ||||
Revenue from contract with customers | 568 | 1,587 | ||
NGLs | ||||
Disaggregation of revenue | ||||
Revenue from contract with customers | 71 | 195 | ||
Natural gas | ||||
Disaggregation of revenue | ||||
Revenue from contract with customers | 61 | 150 | ||
Electricity | ||||
Disaggregation of revenue | ||||
Other revenue | 42 | 87 | ||
Marketing, trading and other | ||||
Disaggregation of revenue | ||||
Other revenue | $ 140 | $ 225 |
REVENUE RECOGNITION - Statements of operations (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
REVENUES AND OTHER | ||||
Oil and gas sales | $ 700 | $ 461 | $ 1,932 | $ 1,387 |
Net derivative loss from commodity contracts | (54) | (65) | (259) | 51 |
Other revenue | 182 | 49 | 313 | 113 |
Total revenues and other | 828 | 445 | 1,986 | 1,551 |
COSTS AND OTHER | ||||
Production costs | 236 | 222 | 679 | 649 |
General and administrative expenses | 81 | 61 | 234 | 183 |
Depreciation, depletion and amortization | 128 | 134 | 372 | 412 |
Taxes other than on income | 45 | 39 | 120 | 103 |
Exploration expenses | 4 | 5 | 18 | 17 |
Other expenses, net | 149 | 29 | 259 | 76 |
Total costs and other | 643 | 490 | 1,682 | 1,440 |
OPERATING (LOSS) INCOME | 185 | (45) | 304 | 111 |
NON-OPERATING (LOSS) INCOME | ||||
Interest and debt expense, net | (95) | (85) | (281) | (252) |
Net gain on early extinguishment of debt | 2 | 26 | 4 | |
Gain on asset divestitures | 3 | 4 | 21 | |
Other non-operating expenses | (4) | (2) | (16) | (11) |
INCOME BEFORE INCOME TAXES | 91 | (132) | 37 | (127) |
Income tax | 0 | 0 | 0 | 0 |
NET INCOME | 91 | (132) | 37 | (127) |
Net income attributable to noncontrolling interests | (25) | (1) | (55) | (1) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | 66 | $ (133) | (18) | $ (128) |
ASU 2014-09 | Previous U.S. GAAP | ||||
REVENUES AND OTHER | ||||
Oil and gas sales | 695 | 1,915 | ||
Net derivative loss from commodity contracts | (54) | (259) | ||
Other revenue | 177 | 242 | ||
Total revenues and other | 818 | 1,898 | ||
COSTS AND OTHER | ||||
Production costs | 236 | 679 | ||
General and administrative expenses | 81 | 234 | ||
Depreciation, depletion and amortization | 128 | 372 | ||
Taxes other than on income | 45 | 120 | ||
Exploration expenses | 4 | 18 | ||
Other expenses, net | 139 | 171 | ||
Total costs and other | 633 | 1,594 | ||
OPERATING (LOSS) INCOME | 185 | 304 | ||
NON-OPERATING (LOSS) INCOME | ||||
Interest and debt expense, net | (95) | (281) | ||
Net gain on early extinguishment of debt | 2 | 26 | ||
Gain on asset divestitures | 3 | 4 | ||
Other non-operating expenses | (4) | (16) | ||
INCOME BEFORE INCOME TAXES | 91 | 37 | ||
NET INCOME | 91 | 37 | ||
Net income attributable to noncontrolling interests | (25) | (55) | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | 66 | (18) | ||
ASU 2014-09 | Change | ||||
REVENUES AND OTHER | ||||
Oil and gas sales | 5 | 17 | ||
Other revenue | 5 | 71 | ||
Total revenues and other | 10 | 88 | ||
COSTS AND OTHER | ||||
Other expenses, net | 10 | 88 | ||
Total costs and other | $ 10 | $ 88 |
INCOME TAXES (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
INCOME TAXES | ||||
Effective tax rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance sheets (Details) - USD ($) $ in Millions |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
||||
Assets | |||||||
Total current assets | $ 546 | $ 483 | |||||
Total property, plant and equipment, net | 6,386 | 5,696 | |||||
Other assets | 52 | 28 | |||||
TOTAL ASSETS | 6,984 | 6,207 | |||||
Total current liabilities | 871 | 732 | |||||
Long-term debt | 5,108 | 5,306 | |||||
Deferred gain and issuance costs, net | 253 | 287 | |||||
Other long-term liabilities | 612 | 602 | |||||
Mezzanine equity | 745 | ||||||
Total equity | (605) | [1] | (720) | $ (574) | $ (557) | ||
TOTAL LIABILITIES AND EQUITY | 6,984 | 6,207 | |||||
Reportable Legal Entity | Parent | |||||||
Assets | |||||||
Total current assets | 5 | 13 | |||||
Total property, plant and equipment, net | 32 | 24 | |||||
Investments in consolidated subsidiaries | 5,858 | 5,105 | |||||
Other assets | 10 | ||||||
TOTAL ASSETS | 5,905 | 5,142 | |||||
Total current liabilities | 187 | 122 | |||||
Long-term debt | 5,108 | 5,306 | |||||
Deferred gain and issuance costs, net | 253 | 287 | |||||
Other long-term liabilities | 152 | 154 | |||||
Amounts due to (from) affiliates | 929 | 87 | |||||
Total equity | (724) | (814) | |||||
TOTAL LIABILITIES AND EQUITY | 5,905 | 5,142 | |||||
Reportable Legal Entity | Combined Guarantor Subsidiaries | |||||||
Assets | |||||||
Total current assets | 475 | 464 | |||||
Total property, plant and equipment, net | 5,823 | 5,580 | |||||
Investments in consolidated subsidiaries | 178 | 606 | |||||
Other assets | 29 | 27 | |||||
TOTAL ASSETS | 6,505 | 6,677 | |||||
Total current liabilities | 682 | 613 | |||||
Other long-term liabilities | 451 | 445 | |||||
Amounts due to (from) affiliates | (929) | (87) | |||||
Total equity | 6,301 | 5,706 | |||||
TOTAL LIABILITIES AND EQUITY | 6,505 | 6,677 | |||||
Reportable Legal Entity | Combined Non-Guarantor Subsidiaries | |||||||
Assets | |||||||
Total current assets | 81 | 12 | |||||
Total property, plant and equipment, net | 531 | 92 | |||||
Other assets | 13 | 1 | |||||
TOTAL ASSETS | 625 | 105 | |||||
Total current liabilities | 17 | 3 | |||||
Other long-term liabilities | 9 | 3 | |||||
Mezzanine equity | 745 | ||||||
Total equity | (146) | 99 | |||||
TOTAL LIABILITIES AND EQUITY | 625 | 105 | |||||
Eliminations | |||||||
Assets | |||||||
Total current assets | (15) | (6) | |||||
Investments in consolidated subsidiaries | (6,036) | (5,711) | |||||
TOTAL ASSETS | (6,051) | (5,717) | |||||
Total current liabilities | (15) | (6) | |||||
Total equity | (6,036) | (5,711) | |||||
TOTAL LIABILITIES AND EQUITY | $ (6,051) | $ (5,717) | |||||
Maximum | |||||||
Total consolidated assets held by Non-Guarantor Subsidiaries (as a percent) | 1.00% | ||||||
|
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Statements of Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | ||||
Total revenues and other | $ 828 | $ 445 | $ 1,986 | $ 1,551 |
Total costs and other | 643 | 490 | 1,682 | 1,440 |
Non-operating (loss) income | (94) | (87) | (267) | (238) |
NET INCOME (LOSS) | 91 | (132) | 37 | (127) |
Net income attributable to noncontrolling interests | (25) | (1) | (55) | (1) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | 66 | (133) | (18) | (128) |
Eliminations | ||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | ||||
Total revenues and other | (73) | (11) | (186) | (32) |
Total costs and other | (73) | (11) | (186) | (32) |
Parent | Reportable Legal Entity | ||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | ||||
Total revenues and other | 5 | 1 | 22 | |
Total costs and other | 62 | 58 | 169 | 165 |
Non-operating (loss) income | (99) | (87) | (272) | (256) |
NET INCOME (LOSS) | (161) | (140) | (440) | (399) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | (161) | (140) | (440) | (399) |
Combined Guarantor Subsidiaries | Reportable Legal Entity | ||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | ||||
Total revenues and other | 766 | 446 | 1,878 | 1,551 |
Total costs and other | 582 | 439 | 1,542 | 1,298 |
Non-operating (loss) income | 5 | 5 | 18 | |
NET INCOME (LOSS) | 189 | 7 | 341 | 271 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | 189 | 7 | 341 | 271 |
Combined Non-Guarantor Subsidiaries | Reportable Legal Entity | ||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK | ||||
Total revenues and other | 135 | 5 | 293 | 10 |
Total costs and other | 72 | 4 | 157 | 9 |
NET INCOME (LOSS) | 63 | 1 | 136 | 1 |
Net income attributable to noncontrolling interests | (25) | $ (1) | (55) | $ (1) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ 38 | $ 81 |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Statements of Cash Flows (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Net cash (used) provided by operating activities | $ 393 | $ 225 |
Net cash used in investing activities | (965) | (174) |
Net cash provided (used) by financing activities | 583 | (35) |
Increase (decrease) in cash | 11 | 16 |
Cash-beginning of period | 20 | 12 |
Cash-end of period | 31 | 28 |
Parent | Reportable Legal Entity | ||
Net cash (used) provided by operating activities | (433) | (403) |
Net cash used in investing activities | (3) | (2) |
Net cash provided (used) by financing activities | 429 | 409 |
Increase (decrease) in cash | (7) | 4 |
Cash-beginning of period | 7 | |
Cash-end of period | 4 | |
Combined Guarantor Subsidiaries | Reportable Legal Entity | ||
Net cash (used) provided by operating activities | 645 | 621 |
Net cash used in investing activities | (921) | (90) |
Net cash provided (used) by financing activities | 278 | (536) |
Increase (decrease) in cash | 2 | (5) |
Cash-beginning of period | 8 | 12 |
Cash-end of period | 10 | 7 |
Combined Non-Guarantor Subsidiaries | Reportable Legal Entity | ||
Net cash (used) provided by operating activities | 181 | 7 |
Net cash used in investing activities | (41) | (82) |
Net cash provided (used) by financing activities | (124) | 92 |
Increase (decrease) in cash | 16 | 17 |
Cash-beginning of period | 5 | |
Cash-end of period | $ 21 | $ 17 |
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