Divestitures

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

Divestitures

In 2018, the Company sold its non-core production and related midstream assets located in the Permian Basin and Huron play (2018 Divestitures). For the nine months ended September 30, 2018, as a result of the 2018 Divestitures, the Company recorded an impairment/loss on sale/exchange of long-lived assets of $2.4 billion. The impairment of these properties and related pipeline assets recorded was due to the carrying value of the assets exceeding the amounts received upon the closing of the 2018 Divestitures.

The fair value of the impaired assets was based on significant inputs that were not observable in the market and, as such, are considered to be Level 3 fair value measurements. See Note 5 for a description of the fair value hierarchy and Note 1 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for the policy on impairment of proved and unproved properties. Key assumptions included in the calculation of the fair value of the impaired assets included (i) reserves, including risk adjustments for probable and possible reserves, (ii) future commodity prices, (iii) to the extent available, market based indicators of fair value including estimated proceeds that could be realized upon a potential disposition, (iv) production rates based on the Company's experience with similar properties it operates, (v) estimated future operating and development costs and (vi) a market-based weighted average cost of capital.

In connection with the closing of the 2018 Divestitures, the Company also recorded a loss of $259.3 million during the third quarter of 2018 related to certain capacity contracts that the Company no longer has existing production to satisfy and does not plan to

use in the future. The loss was recorded in the impairment/loss on sale/exchange of long-lived assets within the Statements of Consolidated Operations. The fair value of the loss for the initial measurement was based upon significant inputs that were not observable in the market and, as such, is considered a Level 3 fair value measurement. The key unobservable input in the calculation is the amount, if any, of potential future economic benefit from the contracts. See Note 5 for a description of the fair value hierarchy.