Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Carrying Amount and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments as of September 30, 2020 and December 31, 2019 were as follows:


	September 30, 2020						December 31, 2019
(in millions)	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Cash and cash equivalents	$	95		$	95		$	5		$	5
2018 revolving credit facility due April 2024	—			—			34			34
Senior notes (1)	2,471			2,429			2,228			2,085
Derivative instruments, net	(125)		(2)	(125)		(2)	155		(2)	155		(2)

(1)Excludes unamortized debt issuance costs and debt discounts.

(2)Includes $1 million and $9 million in premiums paid as of September 30, 2020 and December 31, 2019, respectively, related to certain natural gas fixed price swaps recognized as a component of derivative assets within current assets on the consolidated balance sheet. Includes $3 million in deferred premiums as of September 30, 2020 related to certain natural gas three-way costless collars recognized as a component of derivative liabilities on the consolidated balance sheet.

Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:


	September 30, 2020
	Fair Value Measurements Using:
(in millions)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Assets (Liabilities) at Fair Value
Assets
Purchased fixed price swaps	$	—	$	3	$	—	$	3
Fixed price swaps (1)	—		82		—		82
Two-way costless collars	—		46		—		46
Three-way costless collars (2)	—		153		—		153
Basis swaps	—		53		—		53
Call options	—		13		—		13


Liabilities

Fixed price swaps	—		(43)		—		(43)
Two-way costless collars	—		(81)		—		(81)
Three-way costless collars	—		(290)		—		(290)
Basis swaps	—		(7)		—		(7)
Call options	—		(53)		—		(53)
Fixed price swaps – storage	—		(1)		—		(1)

Total (3)	$	—	$	(125)	$	—	$	(125)

(1)Includes $1 million in premiums paid related to certain natural gas fixed price swaps recognized as a component of derivative assets within current assets on the consolidated balance sheet at September 30, 2020. As certain natural gas fixed price swaps settle, the premium will be amortized and recognized as a component of gain (loss) on derivatives on the consolidated statements of operations.

(2)Includes $3 million in deferred premiums related to certain natural gas three-way costless collars recognized as a component of derivative liabilities within current liabilities on the consolidated balance sheet as of September 30, 2020. As certain natural gas three-way costless collars settle, the premium will be paid and recognized as a component of gain (loss) on derivatives on the consolidated statements of operations.

(3)Includes a net reduction to the liability fair value of $1 million related to estimated nonperformance risk.


	December 31, 2019
	Fair Value Measurements Using:
(in millions)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Assets (Liabilities) at Fair Value
Assets

Fixed price swaps (1)	$	—	$	124	$	—	$	124
Two-way costless collars	—		21		—		21
Three-way costless collars	—		210		—		210
Basis swaps	—		32		—		32
Call options	—		3		—		3
Fixed price swaps - storage	—		1		—		1
Liabilities
Purchased fixed price swaps	—		(1)		—		(1)
Fixed price swaps	—		(9)		—		(9)
Two-way costless collars	—		(13)		—		(13)
Three-way costless collars	—		(168)		—		(168)
Basis swaps	—		(26)		—		(26)
Call options	—		(19)		—		(19)


Total	$	—	$	155	$	—	$	155

(1)Includes $9 million in premiums paid related to certain natural gas fixed price swaps recognized as a component of derivative assets within current assets on the consolidated balance sheet at December 31, 2019. As certain natural gas fixed price swaps settle, the premium will be amortized and recognized as a component of gain (loss) on derivatives on the consolidated statements of operations.