Impairments

Impairments of Oil and Natural Gas Properties

Our proved oil and natural gas properties are subject to quarterly full cost ceiling tests. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. Estimated future net revenues for the quarterly ceiling limit are calculated using the average of commodity prices on the first day of the month over the trailing 12-month period. In the Current Quarter and the Prior Quarter, capitalized costs of oil and natural gas properties exceeded the ceiling, resulting in an impairment in the carrying value of our oil and natural gas properties of $853 million and $4.976 billion, respectively. Cash flow hedges which relate to future periods increased the ceiling test impairment by $166 million and $195 million in the Current Quarter and the Prior Quarter, respectively. Based on the first-day-of-the-month prices we have received over the 11 months ended May 1, 2016, as well as the current strip price for June 2016, we expect to record another material write-down in the carrying value of our oil and natural gas properties in the second quarter of 2016. Further material write-downs in subsequent quarters will occur if the trailing 12-month commodity prices continue to fall as compared to the commodity prices used in prior quarters.

Impairments of Fixed Assets and Other

We review our long-lived assets, other than oil and natural gas properties, for recoverability whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. We recognize an impairment loss if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. A summary of our impairments of fixed assets by asset class and other charges for the Current Quarter and the Prior Quarter is as follows:



	Three Months Ended March 31,
	2016		2015
	($ in millions)
Natural gas compressors	$	20	$	—
Buildings and land	7		—
Other	11		4
Total impairments of fixed assets and other	$	38	$	4

Nonrecurring Fair Value Measurements. Fair value measurements for certain of the impairments discussed above were based on recent sales information for comparable assets. As the fair value was estimated using the market approach based on recent prices from orderly sales transactions for comparable assets between market participants, these values were classified as Level 2 in the fair value hierarchy. Other inputs used were not observable in the market; these values were classified as Level 3 in the fair value hierarchy.