Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

Revenues from Contracts with Customers

Natural gas and liquids. Natural gas, oil and NGL sales are recognized when control of the product is transferred to the customer at a designated delivery point. The pricing provisions of the Company’s contracts are primarily tied to a market index with certain adjustments based on factors such as delivery, quality of the product and prevailing supply and demand conditions in the geographic areas in which the Company operates. Under the Company’s sales contracts, the delivery of each unit of natural gas, oil and NGLs represents a separate performance obligation, and revenue is recognized at the point in time when the performance obligations are fulfilled. There is no significant financing component to the Company’s revenues as payment terms are typically within 30 to 60 days of control transfer. Furthermore, consideration from a customer corresponds directly with the value to the customer of the Company’s performance completed to date. As a result, the Company recognizes revenue in the amount to which the Company has a right to invoice and has not disclosed information regarding its remaining performance obligations.

The Company records revenue from its natural gas and liquids production in the amount of its net revenue interest in sales from its properties. Accordingly, natural gas and liquid sales are not recognized for deliveries in excess of the Company’s net revenue interest, while natural gas and liquid sales are recognized for any under-delivered volumes. Production imbalances are recorded as receivables and payables and not contract assets or contract liabilities as the imbalances are between the Company and other working interest owners, not the end customer.

Marketing. The Company, through its marketing affiliate, generally markets natural gas, oil and NGLs for its affiliated E&P company as well as other joint interest owners who choose to market with Southwestern. In addition, the Company markets some products purchased from third parties. Marketing revenues for natural gas, oil and NGL sales are recognized when control of the product is transferred to the customer at a designated delivery point. The pricing provisions of the Company’s contracts are primarily tied to a market index with certain adjustments based on factors such as delivery, quality of the product and prevailing supply and demand conditions. Under the Company’s marketing contracts, the delivery of each unit of natural gas, oil and NGLs represents a separate performance obligation, and revenue is recognized at the point in time when the performance obligations are fulfilled. Customers are invoiced and revenues are recorded each month as natural gas, oil and NGLs are delivered, and payment terms are typically within 30 to 60 days of control transfer. Furthermore, consideration from a customer corresponds directly with the value to the customer of the Company’s performance completed to date. As a result, the Company recognizes revenue in the amount to which the Company has a right to invoice and has not disclosed information regarding its remaining performance obligations.

Gas gathering. Prior to the Fayetteville Shale sale in December 2018, the Company, through its gathering affiliate, gathered natural gas pursuant to a variety of contracts with customers, including an affiliated E&P company. The performance obligations for gas gathering services included delivery of each unit of natural gas to the designated delivery point, which may include treating of certain natural gas units to meet interstate pipeline specifications. Revenue was recognized at the point in time when performance obligations were fulfilled. Under the Company’s gathering contracts, customers were invoiced and revenue was recognized each month based on the volume of natural gas transported and treated at a contractually agreed upon price per unit. Payment terms were typically within 30 to 60 days of completion of the performance obligations. Furthermore, consideration from a customer corresponded directly with the value to the customer of the Company’s performance completed to date. As a result, the Company recognized revenue in the amount to which the Company had a right to invoice and had not disclosed information regarding its remaining performance obligations. Any imbalances were settled on a monthly basis by cashing-out with the respective shipper. Accordingly, there were no contract assets or contract liabilities related to the Company’s gas gathering revenues.

Disaggregation of Revenues

The Company presents a disaggregation of E&P revenues by product on the consolidated statements of operations net of intersegment revenues. The following table reconciles operating revenues as presented on the consolidated statements of operations to the operating revenues by segment:


(in millions)	E&P		Midstream		Intersegment Revenues		Total
Three months ended September 30, 2019
Gas sales	$	230	$	—	$	8	$	238
Oil sales	66		—		1		67
NGL sales	52		—		—		52
Marketing	—		592		(313)		279


Total	$	348	$	592	$	(304)	$	636

Three months ended September 30, 2018
Gas sales	$	460	$	—	$	5	$	465
Oil sales	61		—		1		62
NGL sales	112		—		—		112
Marketing	—		846		(559)		287
Gas gathering ⁽¹⁾	—		66		(41)		25

Total	$	633	$	912	$	(594)	$	951


(in millions)	E&P		Midstream		Intersegment Revenues		Total
Nine months ended September 30, 2019
Gas sales	$	918	$	—	$	25	$	943
Oil sales	151		—		2		153
NGL sales	191		—		—		191
Marketing	—		2,158		(1,154)		1,004
Other ⁽²⁾	1		1		—		2
Total	$	1,261	$	2,159	$	(1,127)	$	2,293

Nine months ended September 30, 2018
Gas sales	$	1,395	$	—	$	17	$	1,412
Oil sales	139		—		2		141
NGL sales	252		—		—		252
Marketing	—		2,403		(1,598)		805
Gas gathering ⁽¹⁾	—		202		(129)		73
Other ⁽²⁾	4		—		—		4
Total	$	1,790	$	2,605	$	(1,708)	$	2,687

(1)The Company’s gas gathering assets were divested in December 2018 as part of the Fayetteville Shale sale.

(2)Other E&P revenues consists primarily of water sales to third-party operators, and other Midstream revenues consists primarily of sales of gas from storage.

Associated E&P revenues are also disaggregated for analysis on a geographic basis by the core areas in which the Company operates, which are in Pennsylvania and West Virginia. In December 2018, the Company sold 100% of its Fayetteville Shale assets.


	For the three months ended September 30,						For the nine months ended September 30,
(in millions)	2019		2018		2019		2018
Northeast Appalachia	$	175	$	254	$	740	$	794
Southwest Appalachia	173		235		519		557
Fayetteville Shale	—		140		—		431
Other	—		4		2		8
Total	$	348	$	633	$	1,261	$	1,790

Receivables from Contracts with Customers

The following table reconciles the Company’s receivables from contracts with customers to consolidated accounts receivable as presented on the consolidated balance sheet:


(in millions)	September 30, 2019		December 31, 2018
Receivables from contracts with customers	$	235	$	494
Other accounts receivable	88		87
Total accounts receivable	$	323	$	581

Amounts recognized against the Company’s allowance for doubtful accounts related to receivables arising from contracts with customers were immaterial for the three and nine months ended September 30, 2019 and 2018. The Company has no contract assets or contract liabilities associated with its revenues from contracts with customers.