Investments

At September 30, 2012 and December 31, 2011, we had the following investments:



			Carrying Value
	Approximate Ownership %	Accounting Method	September 30, 2012		December 31, 2011
			($ in millions)
Chesapeake Midstream Partners, L.P.	—	Equity	$	—	$	987
FTS International, Inc.	30%	Equity	201		235
Chaparral Energy, Inc.	20%	Equity	144		143
Sundrop Fuels, Inc.	50%	Equity	112		34
Clean Energy Fuels Corp.	—	Cost	100		50
Twin Eagle Resource Management, LLC	30%	Equity	30		20
Clean Energy Fuels Corp.	1%	Fair Value	13		12
Gastar Exploration Ltd.	10%	Fair Value	11		22
Other	—	—	36		28
Total investments			$	647	$	1,531

Chesapeake Midstream Partners, L.P. In June 2012, we sold all of our common and subordinated units representing limited partner interests in Chesapeake Midstream Partners, L.P., now named Access Midstream Partners, L.P. (NYSE:ACMP), and all of our limited liability company interests in the sole member of its general partner to funds affiliated with Global Infrastructure Partners for cash proceeds of $2.0 billion. We recorded a $1.032 billion gain associated with the transaction, including the recognition of a $13 million deferred gain related to equipment previously sold to ACMP.

During the Current Period, we recorded positive equity method adjustments of $46 million for our share of ACMP’s income, received cash distributions of $56 million from ACMP and recorded accretion adjustments of $4 million related to our share of equity in excess of cost. See Note 10 for further discussion of ACMP.

FTS International, Inc. FTS International, Inc. (FTS), based in Fort Worth, Texas, is a privately held company which, through its subsidiaries, provides pressure pumping and well stimulation to oil and gas companies.

In the Current Period, we recorded negative equity method adjustments, prior to intercompany profit eliminations, of $71 million for our share of FTS’s net loss and recorded accretion adjustments of $34 million related to the excess of our underlying equity in net assets of FTS over our carrying value. We also funded a capital call of $3 million in the Current Period. The carrying value of our investment in FTS was less than our underlying equity in net assets by approximately $633 million as of September 30, 2012, of which $296 million was attributed to goodwill. The value attributed to goodwill decreased by $200 million during the Current Quarter, which represents our proportionate share, net of tax, of an impairment recorded by FTS related to its goodwill. The value not attributed to goodwill is being accreted over the nine-year estimated useful lives of the underlying assets.

In addition, in September 2012, we agreed to purchase our pro-rata share, equal to approximately $105 million, of preferred equity securities offered by FTS to existing stockholders. We expect to complete this transaction in November 2012. Each share of preferred stock is convertible into a specified number of shares of FTS common stock automatically upon a qualified initial public offering of FTS common stock and at our option at any time following the second anniversary of the issue date.

Chaparral Energy, Inc. Chaparral Energy, Inc., based in Oklahoma City, Oklahoma, is a private independent oil and natural gas company engaged in the production, acquisition and exploitation of oil and natural gas properties.

In the Current Period, we recorded a positive equity method adjustment of $5 million related to our share of Chaparral's net income, a $2 million charge related to our share of its other comprehensive income, and an amortization adjustment of $2 million related to our carrying value in excess of our underlying equity in net assets. The carrying value of our investment in Chaparral was in excess of our underlying equity in net assets by approximately $52 million as of September 30, 2012. This excess is attributed to the natural gas and oil reserves held by Chaparral and is being amortized over the estimated life of these reserves based on a unit of production rate.

Sundrop Fuels, Inc. In July 2011, we agreed to invest $155 million in preferred equity securities of Sundrop Fuels, Inc., a privately held cellulosic biofuels company based in Longmont, Colorado. The investment will fund construction of a nonfood biomass-based “green gasoline” plant, capable of annually producing more than 40 million gallons of gasoline from natural gas and waste cellulosic material. The investment is intended to accelerate the development of an affordable, stable, room-temperature, natural gas-based fuel for immediate use in automobiles, diesel engine vehicles and aircraft. As of September 30, 2012, we had funded $115 million of our commitment, of which $80 million was in the Current Period. The remaining tranches of preferred equity investment will be scheduled around certain funding and operational milestones that are expected to be reached by July 2013. The full investment will represent approximately 50% of Sundrop Fuels’ equity on a fully diluted basis.

In the Current Period, we recorded a $2 million charge related to our share of Sundrop’s net loss. The carrying value of our investment in Sundrop was in excess of our underlying equity in net assets by approximately $53 million as of September 30, 2012. This excess will be amortized over the life of the plant, once it is placed into service.

Clean Energy Fuels Corp. In July 2011, we agreed to invest $150 million in newly issued convertible promissory notes of Clean Energy Fuels Corp. (Nasdaq:CLNE), based in Seal Beach, California. The investment is being made in three equal $50 million promissory notes, the first two of which were issued in July 2011 and July 2012, with the remaining note scheduled to be issued in June 2013. The notes bear interest at the annual rate of 7.5%, payable quarterly, and are convertible at our option into shares of Clean Energy’s common stock at a 22.5% conversion premium, resulting in a conversion price of $15.80 per share. Under certain circumstances following the second anniversary of the issuance of a note, Clean Energy can force conversion of the debt. The entire principal balance of each note is due and payable seven years following issuance. Clean Energy will use our $150 million investment to accelerate its build-out of LNG fueling infrastructure for heavy-duty trucks at truck stops across interstate highways in the U.S.

In December 2011, we also purchased one million shares of Clean Energy common stock for $10 million and classified this investment as available for sale and reported it at fair value. During the Current Period, the carrying value of our investment increased as the common stock price of Clean Energy increased from $12.46 per share as of December 31, 2011 to $13.17 per share as of September 30, 2012. Through September 30, 2012, we had recorded a mark-to-market gain of $3 million in accumulated other comprehensive income for this investment.

Twin Eagle Resource Management LLC. In 2010, we invested $20 million in Twin Eagle Resource Management LLC, a natural gas trading and management firm. In the Current Period, we invested an additional $16 million. During the Current Period, we recorded a $6 million charge related to our share of Twin Eagle’s net loss.

Gastar Exploration Ltd. Gastar Exploration Ltd. (NYSE Amex:GST), based in Houston, Texas, is an independent energy company engaged in the exploration, development and production of natural gas and oil in the U.S. Our investment in Gastar has a cost basis of $89 million and is classified as available for sale, and reported at fair value. During the Current Period, the carrying value of our investment decreased as the common stock price of Gastar decreased from $3.18 per share as of December 31, 2011 to $1.66 per share as of September 30, 2012. In March 2009, we booked an other-than-temporary-impairment of $70 million, and, through September 30, 2012, we had recorded a mark-to-market loss of $8 million in accumulated other comprehensive income for this investment.

Investments Held for Sale

Pursuant to our reclassification of certain assets and liabilities to held for sale, the following investments held by our midstream business have been identified as investments held for sale.



			Carrying Value
	Approximate Ownership %	Accounting Method	September 30, 2012		December 31, 2011
			($ in millions)
Utica East Ohio Midstream, LLC	59%	Equity	$	75	$	—
Ranch Westex JV, LLC	33%	Equity	32		—
Glass Mountain Pipeline, LLC	25%	Equity	16		—
Total investments held for sale			$	123	$	—

Utica East Ohio Midstream, LLC. In March 2012, CMD entered into an agreement to form Utica East Ohio Midstream, LLC (UEOM) with M3 Midstream, L.L.C. and EV Energy Partners, L.P. to develop necessary infrastructure for the gathering and processing of natural gas and NGL in the Utica Shale play in eastern Ohio. The infrastructure complex will consist of natural gas gathering and compression facilities constructed and operated by CMD, as well as processing, NGL fractionation, loading and terminal facilities constructed and operated by M3 Midstream, L.L.C. CMD's total commitment is $474 million in exchange for an ownership of approximately 59% in UEOM. UEOM is not consolidated because we do not have a controlling interest. As of September 30, 2012, we had funded $75 million of CMD’s total commitment. See Note 10 for further discussion of UEOM.

Ranch Westex, JV LLC. In December 2011, CMD entered into an agreement to form Ranch Westex JV, LLC with two other parties to develop, construct and operate necessary infrastructure for the processing and gathering of natural gas in Ward County, Texas. CMD’s total commitment is $36 million. As of September 30, 2012, we had funded $33 million of this commitment.

Glass Mountain Pipeline, LLC. In April 2012, CMD entered into an agreement with two other parties to form Glass Mountain Pipeline, LLC to construct a 210 mile pipeline in western and north central Oklahoma in which CMD had a 50% ownership. In September 2012, CMD sold 50% of that interest for $47 million and recorded a gain of $31 million. In October 2012, we sold our remaining interest for $52 million and will record an additional gain of $31 million in the fourth quarter of 2012. See Note 10 for further discussion of Glass Mountain Pipeline, LLC.