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Variable Interest Entities (Notes)
9 Months Ended
Sep. 30, 2017
Variable Interest Entity, Measure of Activity [Abstract]  
Variable Interest Entity Disclosure
Variable Interest Entities
We consolidate the activities of VIEs for which we are the primary beneficiary. To determine whether we own a variable interest in a VIE, we perform a qualitative analysis of the entity’s design, organizational structure, primary decision makers and relevant agreements.
Chesapeake Granite Wash Trust (the “Trust”) is considered a VIE due to the lack of voting or similar decision-making rights by its equity holders regarding activities that have a significant effect on the economic success of the Trust and because the royalty interest owners, other than Chesapeake, do not have the ability to exercise substantial liquidation rights. Our ownership in the Trust and our previous obligations under the development agreement constitute variable interests. On June 30, 2017, the Trust’s subordinated units, all of which were held by Chesapeake, converted to common units. We continue to consolidate the activities of the Trust as we are the primary beneficiary of the Trust because (i) we have the power to direct the activities that most significantly impact the economic performance of the Trust via our operation of the majority of the producing wells and the completed development wells, and (ii) we have the obligation to absorb losses that potentially could be significant to the Trust. As a result, we consolidate the Trust in our financial statements, and the common units of the Trust owned by third parties are reflected as a noncontrolling interest. As of September 30, 2017 and December 31, 2016, we had $253 million and $257 million, respectively, of noncontrolling interests on our condensed consolidated balance sheets attributable to the Trust. In the Current Quarter, the Prior Quarter, the Current Period and the Prior Period, we had $1 million, $1 million, $3 million and $1 million, respectively, of net income attributable to the Trust’s noncontrolling interests recorded in our condensed consolidated statements of operations.
The Trust is a consolidated entity whose legal existence is separate from Chesapeake and our other consolidated subsidiaries, and the Trust is not a guarantor of any of Chesapeake’s debt. The creditors or beneficial holders of the Trust have no recourse to the general credit of Chesapeake. In consolidation, as of September 30, 2017, $1 million of cash and cash equivalents, $488 million of proved oil and natural gas properties, $460 million of accumulated depreciation, depletion and amortization and $4 million of other current liabilities were attributable to the Trust. We have presented parenthetically on the face of the condensed consolidated balance sheets the assets of the Trust that can be used only to settle obligations of the Trust and the liabilities of the Trust for which creditors do not have recourse to the general credit of Chesapeake.