Segment Information

6 Months Ended

Jun. 30, 2019

SEGMENT INFORMATION

The Company’s reportable business segments have been identified based on the differences in products or services provided. Revenues for the E&P segment are derived from the production and sale of natural gas and liquids. The Midstream segment generates revenue through the marketing of both Company and third-party produced natural gas and liquids volumes.

Prior to December 2018, the Midstream segment included the Company’s natural gas gathering business associated with its Fayetteville Shale assets. With the closing of the Fayetteville Shale sale in December 2018, the Company’s marketing business comprises substantially all of the Company’s Midstream segment.

Summarized financial information for the Company’s reportable segments is shown in the following table. The accounting policies of the segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of the 2018 Annual Report. Management evaluates the performance of its segments based on operating income, defined as operating revenues less operating costs. Income before income taxes, for the purpose of reconciling the operating income amount shown below to consolidated income before income taxes, is the sum of operating income, interest expense, gain (loss) on derivatives and other income (loss). The “Other” column includes items not related to the Company’s reportable segments, including real estate and corporate items.



	E&P				Midstream				Other				Total

Three months ended June 30, 2019	(in millions)
Revenues from external customers	$	380			$	287			$	—			$	667
Intersegment revenues	(9		)		339				—				330
Depreciation, depletion and amortization expense	118				3				—				121
Operating income (loss)	30			⁽¹⁾	(8		)		—				22
Interest expense ⁽²⁾	15				—				—				15
Gain on derivatives	152				—				—				152
Other loss, net	(5		)		—				(1		)		(6		)
Provision for income taxes ⁽²⁾	15				—				—				15
Assets	5,945			⁽³⁾	277				323			⁽⁴⁾	6,545
Capital investments⁽⁵⁾	367				—				1				368

Three months ended June 30, 2018
Revenues from external customers	$	527			$	289			$	—			$	816
Intersegment revenues	(7		)		508				—				501
Depreciation, depletion and amortization expense	126				16				—				142
Operating income⁽⁶⁾	97			⁽¹⁾	27			⁽⁷⁾	—				124
Interest expense ⁽²⁾	32				—				—				32
Loss on derivatives	(36		)		—				—				(36		)
Loss on early extinguishment of debt	—				—				(8		)		(8		)
Other income, net	3				—				—				3
Assets	5,583			⁽³⁾	1,228				231			⁽⁴⁾	7,042
Capital investments ⁽⁵⁾	396				5				2				403



	E&P				Midstream				Other				Total

Six months ended June 30, 2019	(in millions)
Revenues from external customers	$	931			$	726			$	—			$	1,657
Intersegment revenues	(18		)		841				—				823
Depreciation, depletion and amortization expense	228				5				—				233
Operating income (loss)	240			⁽¹⁾	(5		)		—				235
Interest expense⁽²⁾	29				—				—				29
Gain on derivatives	120				—				—				120
Other loss, net	(4		)		—				(1		)		(5		)
Benefit from income taxes ⁽²⁾	(411		)		—				—				(411		)
Assets	5,945			⁽³⁾	277				323			⁽⁴⁾	6,545
Capital investments⁽⁵⁾	692				—				1				693

Six months ended June 30, 2018
Revenues from external customers	$	1,170			$	566			$	—			$	1,736
Intersegment revenues	(13		)		1,127				—				1,114
Depreciation, depletion and amortization expense	243				42			⁽⁸⁾	—				285
Operating income ⁽⁶⁾	335			⁽¹⁾	44			⁽⁷⁾	—				379
Interest expense⁽²⁾	71				—				—				71
Loss on derivatives	(43		)		—				—				(43		)
Loss on early extinguishment of debt	—				—				(8		)		(8		)
Other income (loss), net	3				(1		)		—				2
Assets	5,583			⁽³⁾	1,228				231			⁽⁴⁾	7,042
Capital investments⁽⁵⁾	730				9				2				741


(1)	Operating income for the E&P segment includes $2 million and $16 million of restructuring charges for the three months ended June 30, 2019 and 2018, respectively, and $5 million and $16 million of restructuring charges for the six months ended June 30, 2019 and 2018, respectively.


(2)	Interest expense and provision (benefit) for income taxes by segment is an allocation of corporate amounts as they are incurred at the corporate level.


(3)	E&P assets includes office, technology, water infrastructure, drilling rigs and other ancillary equipment not directly related to natural gas and oil properties. This also includes deferred tax assets which are an allocation of corporate amounts as they are incurred at the corporate level.

(4)

Other assets represent corporate assets not allocated to segments and assets for non-reportable segments. At June 30, 2019 and 2018, other assets included approximately $155 million and $37 million, respectively, in cash and cash equivalents, $68 million and $89 million, respectively, in income taxes receivable, $50 million and $83 million, respectively, in property, plant and equipment, $10 million and $12 million, respectively, in unamortized debt expense, $6 million and $8 million, respectively, in a non-qualified retirement plan and $3 million, respectively, in other assets for both periods presented. Additionally, the June 30, 2019 asset balance includes $29 million in right-of-use lease assets.


(5)	Capital investments include increases of $39 million and $19 million for the three months ended June 30, 2019 and 2018, respectively, and increases of $105 million and $52 million for the six months ended June 30, 2019 and 2018, respectively, relating to the change in accrued expenditures between years.


(6)	Includes the impact of Fayetteville Shale-related E&P and Midstream operations which were divested on December 3, 2018.


(7)	Operating income for the Midstream segment includes $2 million related to restructuring charges for the three and six months ended June 30, 2018.


(8)	Includes a $10 million impairment related to certain non-core gathering assets.

Included in intersegment revenues of the Midstream segment are $339 million and $463 million for the three months ended June 30, 2019 and 2018, respectively, and $841 million and $1,039 million for the six months ended June 30, 2019 and 2018, respectively, for marketing of the Company’s E&P sales. Corporate assets include cash and cash equivalents, furniture and fixtures and other assets. Corporate general and administrative costs, depreciation expense and taxes, other than income taxes, are allocated to the segments.