Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair value by measurement classification and type Table

The following table summarizes the valuation of our assets and liabilities that are measured at fair value on a recurring basis.



	Fair Value Measurement Classification
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total
	(In millions)
As of December 31, 2013:
Money market fund investments	$	2		$	—		$	—		$	2
Deferred compensation plan assets	8			—			—			8
Investments available-for-sale:
Equity securities	8			—			—			8
Auction rate securities	—			—			39			39
Oil and gas derivative swap contracts	—			(28		)	—			(28		)
Oil and gas derivative option contracts	—			—			(8		)	(8		)
Stock-based compensation liability awards	(11		)	—			(5		)	(16		)
Total	$	7		$	(28	)	$	26		$	5

As of September 30, 2014:
Money market fund investments	$	365		$	—		$	—		$	365
Deferred compensation plan assets	9			—			—			9
Equity securities available-for-sale	9			—			—			9
Oil and gas derivative swap contracts	—			104			—			104
Oil and gas derivative option contracts	—			—			(1		)	(1		)
Stock-based compensation liability awards	(13		)	—			(7		)	(20		)
Total	$	370		$	104		$	(8	)	$	466

Fair value changes level 3 Table

The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the indicated periods.



	Investments			Derivatives			Stock-Based Compensation			Total
	(In millions)
Balance at January 1, 2013	$	36		$	115		$	—		$	151
Realized or unrealized gains (losses):
Included in earnings	—			(59		)	(8		)	(67		)
Included in other comprehensive income (loss)	4			—			—			4
Purchases, issuances, sales and settlements:
Settlements	(1		)	(46		)	—			(47		)
Transfers in to Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Balance at September 30, 2013	$	39		$	10		$	(8	)	$	41

Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at September 30, 2013	$	—		$	(8	)	$	(8	)	$	(16	)

Balance at January 1, 2014	$	39		$	(8	)	$	(5	)	$	26
Realized or unrealized gains (losses) included in earnings	—			—			(42		)	(42		)
Purchases, issuances, sales and settlements:
Sales	(39		)	—			—			(39		)
Settlements	—			4			40			44
Transfers in to Level 3	—			—			—			—
Transfers out of Level 3⁽¹⁾	—			3			—			3
Balance at September 30, 2014	$	—		$	(1	)	$	(7	)	$	(8	)

Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at September 30, 2014	$	—		$	20		$	(3	)	$	17

________


(1)	During the second quarter of 2014, we transferred $3 million of derivative option contracts out of the Level 3 hierarchy. The transfer was a result of our Level 3 swaptions being exercised by the counterparties as swaps on May 30, 2014.

Quantitative disclosures about unobservable inputs



	Estimated Fair Value Asset (Liability)			Quantitative Information about Level 3 Fair Value Measurements
Instrument Type	Estimated Fair Value Asset (Liability)			Valuation Technique	Unobservable Input	Range
	(In millions)
Oil option contracts	$	(8	)	Black-Scholes	Oil price volatility	14.54	%	—	52.12	%
					Credit risk	0.01	%	—	3.95	%
Natural gas option contracts	$	7		Black-Scholes	Natural gas price volatility	24.78	%	—	50.03	%
					Credit risk	0.01	%	—	0.64	%
SVAP	$	(7	)	Monte Carlo	Implied volatility				37.0	%

Estimated fair value of the debt instrument at the balance sheet date

The estimated fair value of our notes, based on quoted prices in active markets (Level 1) as of the indicated dates, was as follows:



	September 30, 2014		December 31, 2013
	(In millions)
5¾% Senior Notes due 2022	$	836	$	767
5⅝% Senior Notes due 2024	1,072		1,025
7⅛% Senior Subordinated Notes due 2018	615		624
6⅞% Senior Subordinated Notes due 2020	730		755

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References+ Details

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details