Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations:

Malaysia Update

In February 2014, Newfield International Holdings, Inc., a wholly-owned subsidiary of the Company, closed the stock purchase agreement to sell its Malaysia business to SapuraKencana Petroleum Berhad, a Malaysian public company, for approximately $898 million (subject to purchase price adjustments). As a result of the sale, we recorded a gain in the first quarter of 2014 of approximately $388 million ($249 million, after tax). As of the date of this report, the final post-close settlement is pending due to a dispute with the purchaser regarding certain post-closing adjustments. We have not recorded any adjustments to the sales price or the gain recognized as we believe the Company would prevail in the event of arbitration on this matter.

China Update

In August 2013, during the installation of the LF-7 topside facilities by a third-party contractor, a hydraulic jacking system malfunctioned, and the installation was suspended. In August 2014, the LF-7 topside facilities were installed, and we began drilling our first well. We expect to achieve first oil production in the fourth quarter of 2014 and continue to work with potential purchasers of our China business.

Loss from discontinued operations from our China business was $2 million ($1 million, net of tax) for the three months ended September 30, 2014, and income was $8 million ($2 million, net of tax) for the nine months ended September 30, 2014. Income from discontinued operations from our China business was $9 million ($8 million, net of tax) for the three months ended September 30, 2013 and $26 million ($13 million, net of tax) for the nine months ended September 30, 2013.

Results of Discontinued Operations

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014		2013
	(In millions)
Oil and gas revenues(1)	$	—		$	189		$	112	$	659
Operating expenses	2			128			83		501
Income (loss) from discontinued operations	(2		)	61			29		158
Other income (expense)	—			(1		)	—		(2		)
Gain on sale of Malaysia business	—			—			388		—
Income (loss) from discontinued operations before income taxes	(2		)	60			417		156
Income tax provision (benefit):
Current	(1		)	10			13		65
Deferred	—			19			144		38
Total income tax provision (benefit)	(1		)	29			157		103
Income (loss) from discontinued operations, net of tax	$	(1	)	$	31		$	260	$	53

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(1) Certain payments to foreign governments made on our behalf that are part of the revenue process are recorded as a reduction of the related oil and gas revenues.

Income Taxes

Historically, our international effective tax rate has been approximately 37%. As a result of our December 2012 decision to repatriate earnings from our international operations, we have experienced higher international effective tax rates due to these earnings being taxed both in the U.S. and the local countries. We expect this to continue until we fully divest our international businesses. The effective tax rate for our discontinued operations for the three months ended September 30, 2014 was 63.1% and for the nine months ended September 30, 2014 was 37.8% as the majority of our income (loss) from discontinued operations resulted from the gain on the sale of our Malaysia business, which was only taxable in the U.S. The effective tax rate for our discontinued operations for the three months ended September 30, 2013 was 48.2% and for the nine months ended September 30, 2013 was 65.7%.

Assets and Liabilities in the Consolidated Balance Sheet Attributable to Discontinued Operations

	September 30,		December 31,
	2014		2013
	(In millions)
Current assets:
Cash and cash equivalents	$	27	$	84
Accounts receivable	89		200
Inventories	14		130
Other current assets	5		33
Total current assets	135		447
Noncurrent assets:
Oil and gas properties, net of accumulated depreciation, depletion and amortization of $118 and $1,121 as of September 30, 2014 and December 31, 2013, respectively	540		989
Deferred taxes	—		19
Other assets	1		4
Total noncurrent assets	541		1,012
Total assets	$	676	$	1,459
Current liabilities:
Accounts payable	$	3	$	38
Accrued liabilities	202		324
Asset retirement obligations	—		49
Other current liabilities	—		18
Total current liabilities	205		429
Noncurrent liabilities:
Asset retirement obligations	2		86
Deferred taxes	104		129
Other liabilities	—		11
Total noncurrent liabilities	106		226
Total liabilities	$	311	$	655

Inventories

Substantially all of the crude oil from our international offshore operations is produced into floating production, storage and off-loading vessels (FPSOs) and “lifted” and sold periodically as barge quantities are accumulated. At December 31, 2013, the crude oil inventory from our Malaysia and China operations consisted of approximately 1.1 million barrels of crude oil valued at cost of $90 million and is included in the “Inventories” line item in the preceding table and in our consolidated balance sheet. Cost for purposes of the carrying value of oil inventory is the sum of related production costs and depletion expense. As of September 30, 2014, we had crude oil inventory of approximately 75,000 barrels valued at cost of $3 million related to our China operations. The remaining inventory is materials and supplies for use in our oil and gas operations.

Oil and Gas Properties

As of September 30, 2014, all of our oil and gas properties in our discontinued operations were subject to amortization. As of December 31, 2013, approximately $115 million of our Malaysia oil and gas properties in our discontinued operations were not subject to amortization.

Asset Retirement Obligations

During the nine months endedSeptember 30, 2014, asset retirement obligations were reduced by $133 million as a result of the sale of our Malaysia business in February 2014.