New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

New Accounting Standards Implemented/New Accounting Standards Not Yet Implemented

New Accounting Standards Implemented

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“Update 2016-02”), which seeks to increase transparency and comparability among organizations by, among other things, recognizing lease assets and lease liabilities on the balance sheet for leases classified as operating leases under previous GAAP and disclosing key information about leasing arrangements.  The codification was amended through additional ASUs. For public entities, Update 2016-02 became effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted ASC 842 with an effective date of January 1, 2019 using the modified retrospective approach for all leases that existed at the date of initial application. The Company elected to apply the transition as of the beginning of the period of adoption. For leases that existed at the period of adoption on January 1, 2019, the incremental borrowing rate as of the application date was used to calculate the present value of remaining lease payments. Upon adoption of ASC 842, the Company recognized a discounted right-of-use asset and corresponding lease liability with opening balances of approximately $105 million as of January 1, 2019. The adoption of the standard did not materially change the Company’s consolidated statement of operations or its consolidated statement of cash flows. Please refer to Note 4 – “Leases” for full disclosure.

New Accounting Standards Not Yet Implemented

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Update 2016-13”). Update 2016-13 replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables.

From evaluation of the Company’s current credit portfolio, which includes trade receivables from commodity sales, joint interest billings due from partners and other receivables, historical credit losses have been de minimis. The Company believes that its expected future credit losses will not be significant, and therefore Southwestern does not believe the adoption of the standard will have a material impact on its consolidated financial statements. The Company will continue to monitor changes in its credit portfolio as evaluation progresses. For public business entities, the new standard is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period.