Impairments

Impairment of Natural Gas and Oil Properties

We review, on a quarterly basis, the carrying value of our natural gas and oil properties under the full cost accounting rules of the SEC. This quarterly review, referred to as a ceiling test, is described in Note 1 under Natural Gas and Oil Properties. In 2012, capitalized costs of natural gas and oil properties exceeded the ceiling, resulting in an impairment in the carrying value of natural gas and oil properties of $3.315 billion. Cash flow hedges as of September 30, 2012, which related to future periods, increased the ceiling test impairment by $279 million. We were not required to record impairments of natural gas and oil properties for any other quarter in 2012 or for any quarters in 2011 or 2013.

Impairments of Fixed Assets and Other

A summary of our impairments of fixed assets by asset class and other charges for the years ended December 31, 2013, 2012 and 2011 is as follows:



	Years Ended December 31,
	2013		2012		2011
	($ in millions)
Buildings and land	$	366	$	248	$	3
Drilling rigs and equipment	71		60		—
Gathering systems	22		6		43
Other	87		26		—
Total impairments of fixed assets and other	$	546	$	340	$	46

Buildings and Land. In 2013, we determined we would sell certain of our buildings and land (other than our core campus) in the Oklahoma City area. Some of these assets have been actively marketed and we believe it is probable they will be sold over the next 12 months. As a result, these assets qualified as held for sale as of December 31, 2013. We recognized an impairment loss of $186 million during 2013 on these assets for the difference between the carrying amount and fair value of the assets, less the anticipated costs to sell. See Assets and Liabilities Held for Sale in Note 15. We measured the fair value of these assets based on prices from orderly sales transactions for comparable properties between market participants, discounted cash flows or purchase offers we received from third parties.

Given the impairment losses associated with these assets, in 2013 we tested other noncore buildings and land that we own in the Oklahoma City area for recoverability. Our estimate of the future undiscounted cash flows for these assets was less than their carrying amounts, and we recognized an additional impairment loss of $69 million on these assets for the difference between the carrying amount and fair value of the assets. We measured the fair value of these assets based on prices from orderly sales transactions for comparable properties between market participants and, in certain cases, discounted cash flows.

Due to a decrease in the estimated market prices of certain surface land classified as held for sale in the Fort Worth, Texas area, we recognized an additional impairment loss of $86 million in 2013. We measured the fair value of these assets based on recent prices from orderly sales transactions for comparable properties between market participants. In addition, we tested other noncore surface land that we own in the Fort Worth area for recoverability in 2013 and recognized an additional impairment loss of $10 million on these assets for the difference between the carrying amount and fair value of the assets. In 2012, we recognized $248 million of impairment losses associated with an office building and surface land located in our Barnett Shale operating area. The change in business climate in the Barnett Shale in 2012, evidenced by our significant reduction in Barnett Shale operations and depressed natural gas prices, required us to test these long-lived assets for recoverability. We received a purchase offer from a third party that we used to determine the fair value of the office building and measured the fair value of the surface land using prices from orderly sales transactions for comparable properties between market participants.

Finally, we recorded an impairment loss of approximately $15 million on certain of our buildings and land outside of the Oklahoma City and Fort Worth areas in 2013. All the buildings and land for which impairment losses were recognized in 2013, 2012 and 2011 are included in our other segment.

Drilling Rigs and Equipment. In 2013, we negotiated the purchase of 23 leased rigs (two of which were classified as held for sale assets as of December 31, 2013) from various lessors for an aggregate purchase price of $141 million and paid approximately $22 million in early lease termination costs, which is included in impairments of fixed assets and other in the consolidated statement of operations. In addition, we impaired approximately $22 million of leasehold improvements and other costs associated with these transactions. See Note 4 for a description of the master lease agreements. In addition, in 2013, we recognized $27 million of impairment losses on certain of our drilling rigs that qualified as held for sale during 2013 for the difference between the carrying amount and fair value, less the anticipated costs to sell. We estimated the fair value using prices expected to be received. In 2012, we negotiated the purchase of 25 leased rigs from various lessors for an aggregate purchase price of $36 million and paid approximately $25 million in early lease termination costs, which is included in impairments of fixed assets and other in the consolidated statement of operations. In addition, in 2012, we recognized $26 million of impairment losses on certain of our drilling rigs that we expected would have insufficient cash flow to recover carrying values because of a change in business climate resulting from depressed natural gas prices. We estimated the fair value of the drilling rigs using prices expected to be received from the sale of each rig in an orderly transaction between market participants. Also in 2012, we recognized $9 million of impairment losses primarily related to drill pipe and other oilfield services equipment. The drilling rigs and equipment are included in our oilfield services operating segment.

Gathering Systems. In 2013, 2012 and 2011, we recognized approximately $22 million, $6 million and $43 million, respectively, of impairment losses on certain of our gathering systems classified as held for sale as of December 31, 2013 and 2012 based on decreases in the estimated fair value of these assets. We estimated the fair value of the gathering systems using prices expected to be received from the sale of each gathering system in an orderly transaction between market participants. These gathering systems are included in our marketing, gathering and compression operating segment.

Other. In 2013, we recorded approximately $87 million of other charges, including $26 million for the termination of a gas gathering agreement, $28 million for the impairment of certain assets used to promote natural gas demand, $15 million for the termination of a contract drilling agreement with a third party, $2 million related to the estimated 2012 shortfall of our net acreage maintenance commitment with Total in the Barnett Shale and $16 million related to various other assets. In 2012, we recorded a $26 million charge related to the estimated 2012 shortfall of our net acreage maintenance commitment with Total in the Barnett Shale. See Commitments - Net Acreage Maintenance Commitments in Note 4 for further discussion.