Retirement and Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Retirement and Employee Benefit Plans

RETIREMENT AND EMPLOYEE BENEFIT PLANS

401(k) Defined Contribution Plan

The Company has a 401(k) defined contribution plan covering eligible employees. The Company expensed $2 million of contribution expense in each of 2022, 2021 and 2020, respectively. Additionally, the Company capitalized $2 million of

contributions in both 2022 and 2021 and $1 million in 2020 directly related to the acquisition, exploration and development activities of the Company’s natural gas and oil properties.

Defined Benefit Pension and Other Postretirement Plans

Prior to January 1, 2021, substantially all of the Company’s employees were covered by the defined benefit pension plan, a cash balance plan that provided benefits based upon a fixed percentage of an employee’s annual compensation. As part of an ongoing effort to reduce costs, the Company elected to freeze its pension plan effective January 1, 2021. Employees that were participants in the pension plan prior to January 1, 2021 will no longer receive an increased benefit based on service after December 31, 2020 but will continue to receive an increased benefit based on the interest component of the plan until such time as they receive a lump sum distribution payment or their balance is converted into an annuity payment agreement as elected by the plan participant. On September 13, 2021, the Compensation Committee of the Board of Directors approved terminating the Company’s pension plan, effective December 31, 2021. This decision, among other benefits, will provide plan participants quicker access to, and greater flexibility in, the management of participants’ respective benefits due under the plan.

The Company has commenced the pension plan termination process, and, on April 6, 2022, the Internal Revenue Service issued a favorable determination letter, concurring that the plan has met all of the qualification requirements under the Internal Revenue Code. In December 2022, the Company distributed approximately 40% of the plan’s assets to participants in the form of lump sum payments in connection with a limited distribution window provided to all active and former employee participants as part of the plan termination process. For those plan participants who did not elect the lump sum payment option, the Company expects to transfer the remaining pension obligation from the plan to a qualified insurance company by June 2023. As of December 31, 2022, the assets held by the pension plan exceeded the plan’s benefit payment obligation by $15 million, as determined after the lump sum distributions were made.

The postretirement benefit plan provides contributory health care and life insurance benefits. Employees become eligible for these benefits if they meet age and service requirements. Generally, the benefits paid are a stated percentage of medical expenses reduced by deductibles and other coverages.

Substantially all of the Company’s employees continue to be covered by the postretirement benefit plans. The Company accounts for its defined benefit pension and other postretirement plans by recognizing the funded status of each defined pension benefit plan and other postretirement benefit plan on the Company’s balance sheet. In the event a plan is overfunded, the Company recognizes an asset. Conversely, if a plan is underfunded, the Company recognizes a liability.

The following provides a reconciliation of the changes in the plans’ benefit obligations, fair value of assets and funded status as of December 31, 2022 and 2021:

	Pension Benefits				Other Postretirement Benefits
(in millions)	2022		2021		2022		2021
Change in benefit obligations:
Benefit obligation at January 1	$	126	$	139	$	13	$	13
Service cost	—		—		2		2
Interest cost	3		4		—		—
Actuarial gain	(29)		(4)		(5)		(2)
Benefits paid	(2)		(2)		(1)		—
Plan amendments	(2)		—		—		—
Settlements	(39)		(11)		—		—
Benefit obligation at December 31	$	57	$	126	$	9	$	13

	Pension Benefits				Other Postretirement Benefits
(in millions)	2022		2021		2022		2021
Change in plan assets:
Fair value of plan assets at January 1	$	114	$	106	$	—	$	—
Actual return on plan assets	—		6		—		—
Employer contributions	—		12		1		1
Benefits paid	(2)		(2)		(1)		(1)
Settlements	(40)		(8)		—		—
Fair value of plan assets at December 31	$	72	$	114	$	—	$	—
Funded status of plans at December 31 (1)	$	15	$	(12)	$	(9)	$	(13)

(1)The funded status of the pension plan includes a $1 million liability related to a supplemental employee retirement plan as of December 31, 2022 and 2021.

The Company uses a December 31 measurement date for all of its plans and had assets recorded for the overfunded status and liabilities recorded for the underfunded status for each period as presented above.

The pension plans’ projected benefit obligation, accumulated benefit obligation and fair value of plan assets as of December 31, 2022 and 2021 are as follows:

(in millions)	2022		2021
Projected benefit obligation	$	57	$	126
Accumulated benefit obligation	57		126
Fair value of plan assets	72		114

Pension and other postretirement benefit costs include the following components for 2022, 2021 and 2020:

	Pension Benefits						Other Postretirement Benefits
(in millions)	2022		2021		2020		2022		2021		2020
Service cost (1)	$	—	$	—	$	7	$	2	$	2	$	2
Interest cost	3		4		5		—		—		—
Expected return on plan assets	—		(4)		(6)		—		—		—
Amortization of prior service cost	(1)		—		—		—		—		—
Amortization of net loss	—		—		1		—		—		—
Net periodic benefit cost	2		—		7		2		2		2
Settlement (gain) loss	(1)		2		—		—		—		—
Total benefit cost	$	1	$	2	$	7	$	2	$	2	$	2

(1)The Company froze its pension plan effective January 1, 2021, resulting in no service cost for the years ended December 31, 2022 and December 31, 2021.

Service cost is classified as general and administrative expenses on the consolidated statements of operations. All other components of total benefit cost (benefit) are classified as other income (loss), net on the consolidated statements of operations. The Company froze its pension plan effective January 1, 2021, resulting in no service cost for the years ended December 31, 2022 and December 31, 2021. The weighted average interest crediting rate for the pension plan is 6.0%.

The Company valued its pension assets and pension liabilities prior to settlement activity resulting in a $17 million net pension asset as of December 31, 2022. As a result of settlement accounting, the Company recorded a $2 million reduction to its net pension asset with a corresponding adjustment to accumulated other comprehensive income related to the lump sum distributions to plan participants.

The Company recognized a $2 million non-cash settlement loss related to $8 million of lump sum payments from the pension plan for the year ended December 31, 2021. As a result of settlement accounting requirements, the Company recorded a $4 million reduction to its net pension liability as of December 31, 2021, with a corresponding reduction to accumulated other comprehensive loss.

The Company had no material settlement gains or losses in 2020.

Amounts recognized in other comprehensive income for the years ended December 31, 2022 and 2021 were as follows:

	Pension Benefits				Other Postretirement Benefits
(in millions)	2022		2021		2022		2021
Net actuarial gain arising during the year	$	30	$	5	$	4	$	2
Amortization of prior service cost	(2)		—		—		—
Amortization of net loss	—		1		—		—
Settlements	(1)		5		—		—
Less: Tax effect (1)	—		—		—		—
Amounts recognized in other comprehensive income	$	27	$	11	$	4	$	2

(1)Other postretirement benefit tax effects of $1.1 million for the year ended December 31, 2022 and pension and other postretirement benefit tax effects of $2.7 million and $0.4 million, respectively, for the year ended December 31, 2021, were netted against a valuation allowance and therefore included in accumulated other comprehensive income.

Included in accumulated other comprehensive income as of December 31, 2022 and 2021 was an $8 million gain ($7 million net of tax) and a $23 million loss ($18 million net of tax), respectively, related to the Company’s pension and other postretirement benefit plans. For the year ended December 31, 2022, $31 million was classified from accumulated other comprehensive income, primarily driven by actuarial gains and settlements. 

The assumptions used in the measurement of the Company’s benefit obligations as of December 31, 2022 and 2021 are as follows:

	Pension Benefits				Other Postretirement Benefits
	2022		2021		2022		2021
Discount rate	5.60	%	3.20	%	5.50	%	3.10	%
Rate of compensation increase (1)	n/a		3.50	%	n/a		n/a

(1)Rate of compensation increase for other postretirement benefits is disclosed as “n/a” as the benefit is the same for all employees and not based on compensation.

The assumptions used in the measurement of the Company’s net periodic benefit cost for 2022, 2021 and 2020 are as follows:

	Pension Benefits						Other Postretirement Benefits
	2022		2021		2020		2022		2021		2020
Discount rate	5.60	%	3.20	%	3.70	%	3.10	%	2.80	%	3.50	%
Expected return on plan assets	0.10	%	0.10	%	6.50	%	n/a		n/a		n/a
Rate of compensation increase (1)	n/a		3.50	%	3.50	%	n/a		n/a		n/a

(1)Rate of compensation increase for other postretirement benefits is disclosed as “n/a” as the benefit is the same for all employees and not based on compensation.

The expected return on plan assets for the various benefit plans is based upon a review of the historical returns experienced, combined with the future expected returns based upon the asset allocation strategy employed. The plans seek to achieve an adequate return to fund the obligations in a manner consistent with the federal standards of the Employee Retirement Income Security Act and with a prudent level of diversification.

For measurement purposes, the following trend rates were assumed for 2022 and 2021:

	2022		2021
Health care cost trend assumed for next year	7.0	%	6.5	%
Rate to which the cost trend is assumed to decline	5.0	%	5.0	%
Year that the rate reaches the ultimate trend rate	2040		2038

Pension Payments and Asset Management

In 2022, the Company made no contributions to its pension plan and less than $1 million to its other postretirement benefit plan and does not expect to make any additional contributions to its pension plan through the completion of the plan termination.

The Company has adjusted actuarial expectations based on an estimated timeline of approvals and completion. Through December 31, 2022, the Company distributed $38 million of the plan’s assets in the form of lump sum payments in connection with a limited distribution window provided to all active and former employee participants as part of the plan termination process. For those plan participants who did not elect the lump sum payment option, the Company expects to transfer the remaining

pension obligation from the plan to a qualified insurance company by June 2023. The following timeline reflects the Company’s current estimate of benefit payments to be made and the timing thereof, including projected future interest costs:

Pension Benefits			Other Postretirement Benefits
(in millions)			(in millions)
2023	$	58	2023	$	—
2024	—		2024	—
2025	—		2025	1
2026	—		2026	1
2027	—		2027	1
Years 2028-2032	—		Years 2028-2032	4

The Company’s overall investment strategy has been to provide an adequate pool of assets to support both the long-term growth of plan assets and to ensure adequate liquidity exists for the near-term payment of benefit obligations to participants, retirees and beneficiaries. The Benefits Administration Committee (“BAC”) of the Company, appointed by the Compensation Committee of the Board of Directors, currently administers the Company’s pension plan assets. In anticipation of the pension plan termination, the BAC has adjusted the asset-class mix to more investment grade fixed income assets to mitigate equity market risk, while also preserving cash to satisfy potential interim plan termination-related expenditures.

The table below presents the allocation ranges targeted by the BAC and the actual weighted-average asset allocation of the Company’s pension plan as of December 31, 2022, by asset category. The asset allocation targets are subject to change and the BAC allows for its actual allocations to deviate from target as a result of current and anticipated market conditions. Plan assets are periodically balanced whenever the allocation to any asset class falls outside of the specified range.

	Pension Plan Asset Allocations
Asset category:	Target Range		Actual
Fixed income (1)	70 - 100%		97	%
Cash (2)	0 - 30%		3	%
Total	100	%	100	%

(1)Includes fixed income pension plan assets in the table below.

(2)Includes Cash and cash equivalent pension plan assets in the table below.

Utilizing the fair value hierarchy described in Note 8, the Company’s fair value measurement of pension plan assets as of December 31, 2022 is as follows:

(in millions)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured within fair value hierarchy
Fixed income (1)	69		69		—		—
Cash and cash equivalents	2		2		—		—
Total plan assets at fair value	$	71	$	71	$	—	$	—

(1)U.S. Treasury Notes.

Utilizing the fair value hierarchy described in Note 8, the Company’s fair value measurement of pension plan assets at December 31, 2021 was as follows:

(in millions)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Measured within fair value hierarchy
Fixed income (1)	90		90		—		—
Cash and cash equivalents	24		24		—		—
Total plan assets at fair value	$	114	$	114	$	—	$	—

(1)U.S. Treasury Notes

The Company’s pension plan assets that are classified as Level 1 are the investments comprised of either cash or investments in open-ended mutual funds which produce a daily net asset value that is validated with a sufficient level of observable activity to support classification of the fair value measurement as Level 1. No concentration of risk arising within or across categories of plan assets exists due to any significant investments in a single entity, industry, country or investment fund.