3. Acquisitions, Divestitures, and Assets Held for Sale

Acquisitions On December 15, 2016, the Company closed the GOM Acquisition for $1.8 billion using a portion of the net proceeds from the September 2016 issuance of 40.5 million shares of its common stock. This acquisition constitutes a business combination and was accounted for using the acquisition method of accounting. This acquisition expanded Anadarko’s operated infrastructure and tie-back inventory, more than doubled the Company’s ownership in the Lucius development to approximately 49%, and doubled its net production from the Gulf of Mexico. The following summarizes the fair value of assets acquired and liabilities assumed at the acquisition date, which were finalized during the quarter ended June 30, 2017:



millions
Current assets	$	8
Properties and equipment	2,492
Other assets	145
AROs	(816		)
Net assets acquired	$	1,829
Accounts payable	(5		)
Other long-term liabilities	(109		)
Cash paid	$	1,715

Fair-value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of properties and equipment is primarily based on income and cost approaches. As part of the acquisition, Anadarko agreed to pay the seller, on a quarterly basis, a proportionate amount of gross proceeds from a certain contract until the amount paid equals approximately $150 million. The fair value of the contingent consideration of $103 million was estimated using the income approach and is included in accounts payable and other long-term liabilities in the table above. The assets acquired and liabilities assumed are included within the Exploration and Production reporting segment. Results of operations attributable to the acquisition are included in the Company’s Consolidated Statements of Income from the acquisition date and are not material to the Company’s Consolidated Statements of Income.

The following summarizes the unaudited pro forma condensed financial information of the Company as if the acquisition had occurred on January 1, 2015:



millions	2016			2015
Revenues	$	8,849		$	9,786
Net income (loss)	(2,623		)	(6,560		)

The unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisition been completed at January 1, 2015, nor is it necessarily indicative of future operating results of the combined entity. The pro forma information includes adjustments for revenues and direct expenses based on historical results of the acquired assets and DD&A based on the purchase price allocated to property, plant, and equipment and estimated useful lives. Adjustments are not included for the acquired assets’ historical property impairments as they were made under the full cost method of accounting. The pro forma adjustments include estimates and assumptions based on currently available information. Management believes the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected. The unaudited pro forma information does not reflect any cost savings anticipated as a result of the acquisition or any future acquisition related expenses.

3. Acquisitions, Divestitures, and Assets Held for Sale (Continued)

Property Exchange On March 17, 2017, WES acquired a third party’s 50% nonoperated interest in the DBJV System in exchange for WES’s 33.75% interest in nonoperated Marcellus midstream assets and $155 million in cash. WES recognized a gain of $126 million as a result of this transaction. After the acquisition, the DBJV System is 100% owned by WES and consolidated by Anadarko.

Divestitures and Assets Held for Sale The following summarizes the proceeds received and gains (losses) recognized on divestitures and assets held for sale for the years ended December 31:



millions	2017		2016			2015
Proceeds received, net of closing adjustments	$	4,008	$	2,356		$	1,415
Gains (losses) on divestitures, net ^{(1) (2)}	674		(757		)	(1,022		)

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⁽¹⁾	Includes goodwill allocated to divestitures of $209 million in 2017, $397 million in 2016, and $184 million in 2015.


⁽²⁾	Includes the $126 million gain related to the property exchange discussed above.

2017 During the year ended December 31, 2017, the Company divested of the following assets:


•	Eagleford assets in South Texas, included in the Exploration and Production reporting segment, for net proceeds of $2.1 billion and a net gain of $729 million


•	Eaglebine assets in Southeast Texas, included in the Exploration and Production reporting segment, for net proceeds of $533 million and a net gain of $282 million


•	CBM assets in Utah, included in the Exploration and Production and WES Midstream reporting segments, for net proceeds of $69 million and a net loss of $52 million


•	Marcellus assets in Pennsylvania, included in the Exploration and Production and Other Midstream reporting segments, for net proceeds of $951 million and net losses of $55 million in 2017 and $129 million in 2016


•	Moxa assets in Wyoming, included in the Exploration and Production reporting segment, for net proceeds of $313 million and a net loss of $204 million

Certain nonoperated assets located in Alaska included in the Exploration and Production reporting segment satisfied criteria to be considered held for sale during the fourth quarter of 2017, at which time the Company remeasured these assets to their current fair value using a market approach and Level 2 fair-value measurement and recognized a loss of $154 million. At December 31, 2017, the Company’s Consolidated Balance Sheet included long‑term assets of $573 million and long-term liabilities of $27 million associated with assets held for sale. Subsequent to year end, the Company divested its nonoperated interest in Alaska for net proceeds of $383 million. The transaction is subject to regulatory approval.

3. Acquisitions, Divestitures, and Assets Held for Sale (Continued)

2016 During the year ended December 31, 2016, the Company divested of the following assets:


•	Hugoton assets in Kansas, included in the Exploration and Production and WES Midstream reporting segments, for net proceeds of $159 million and a loss of $4 million


•	Ozona and Steward assets in West Texas, included in the Exploration and Production and Other Midstream reporting segments, for net proceeds of $221 million and a loss of $52 million


•	Wamsutter assets in Wyoming, included in the Exploration and Production reporting segment, for net proceeds of $588 million and a loss of $58 million


•	Elm Grove assets in East Texas, included in the Exploration and Production reporting segment, for net proceeds of $89 million and a loss of $64 million


•	East Chalk and Carthage assets in East Texas/Louisiana, included in the Exploration and Production and Other Midstream reporting segments, for net proceeds of $1.0 billion and a net loss of $439 million

Certain Marcellus U.S. onshore assets located in Pennsylvania included in the Exploration and Production and Other Midstream reporting segments satisfied criteria to be considered held for sale during the fourth quarter of 2016, at which time the Company remeasured these assets to their current fair value using a market approach and Level 2 fair-value measurement and recognized a loss of $129 million. At December 31, 2016, the Company’s Consolidated Balance Sheet included long-term assets of $1.2 billion, which included $193 million of goodwill, and long-term liabilities of $66 million associated with assets held for sale.

2015 During the year ended December 31, 2015, the Company divested of the following assets:


•	Freestone and Dew Pinnacle assets in East Texas, included in the Exploration and Production and WES Midstream reporting segments, for net proceeds of $425 million and a loss of $110 million


•	EOR assets in Wyoming, included in the Exploration and Production reporting segment, for net proceeds of $675 million and a loss of $350 million


•	Powder River Basin CBM assets in Wyoming, included in the Exploration and Production and Other Midstream reporting segments, for net proceeds of $154 million and a loss of $538 million