| Summary of Significant Accounting Policies | Nature of Business QEP Resources, Inc. (QEP or the Company) is an independent crude oil and natural gas exploration and production company with operations in two regions of the United States: the Southern Region (primarily in Texas) and the Northern Region (primarily in North Dakota). During 2018, the Company sold its Uinta Basin assets and entered into purchase and sale agreements to divest substantially all of its Haynesville/Cotton Valley assets in Louisiana and its Williston Basin assets in North Dakota. In January, the Company closed the sale of its Haynesville/Cotton Valley assets. In February 2019, the Company agreed with the buyer to terminate the purchase and sale agreement related to its Williston Basin assets. Unless otherwise specified or the context otherwise requires, all references to "QEP" or the "Company" are to QEP Resources, Inc. and its subsidiaries on a consolidated basis. QEP's corporate headquarters are located in Denver, Colorado and shares of QEP's common stock trade on the New York Stock Exchange (NYSE) under the ticker symbol "QEP". Principles of Consolidation The Consolidated Financial Statements contain the accounts of QEP and its majority-owned or controlled subsidiaries. The Consolidated Financial Statements were prepared in accordance with GAAP and with the instructions for annual reports on Form 10-K and Regulation S-X. All significant intercompany accounts and transactions have been eliminated in consolidation. All dollar and share amounts in this Annual Report on Form 10-K are in millions, except per share information and where otherwise noted. Business Segments QEP conducted a segment analysis in accordance with Accounting Standards Codification (ASC) Topic 280, Segment Reporting, and determined that QEP has one reportable segment. Reclassifications Certain prior period balances on the Consolidated Balance Sheets and Consolidated Statements of Cash Flows have been reclassified due to noncurrent held for sale classification related to the divestiture of the Uinta Basin assets and Haynesville/Cotton Valley assets and to conform to the current year presentation. Such reclassifications had no effect on the Company's net income (loss), earnings (loss) per share or retained earnings previously reported. Use of Estimates The preparation of the Consolidated Financial Statements and Notes in conformity with GAAP requires that management formulate estimates and assumptions that affect revenues, expenses, assets, liabilities and the disclosure of contingent assets and liabilities. A significant item that requires management's estimates and assumptions is the estimate of proved oil and condensate, gas and NGL reserves, which are used in the calculation of depreciation, depletion and amortization rates of its oil and gas properties, impairment of proved properties and asset retirement obligations. Changes in estimated quantities of its reserves could impact the Company's reported financial results as well as disclosures regarding the quantities and value of proved oil and gas reserves. Other items subject to estimates and assumptions include the carrying amount of property, plant and equipment, assigning fair value and allocating purchase price in connection with business combinations, valuation allowances for receivables, income taxes, valuation of derivatives instruments, contingencies, accrued liabilities, accrued revenue and related receivables and obligations related to employee benefits, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates. Risks and Uncertainties The Company's revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for oil, gas and NGL, which are affected by many factors outside of QEP's control, including changes in market supply and demand. Changes in market supply and demand are impacted by weather conditions, pipeline capacity constraints, inventory storage levels, basis differentials, export capacity, strength of the U.S. dollar and other factors. Field-level prices received for QEP's oil and condensate and gas production have historically been volatile and may be subject to significant fluctuations in the future. The Company's derivative contracts serve to mitigate in part the effect of this price volatility on the Company's cash flows, and the Company has derivative contracts in place for a portion of its expected future oil and condensate and gas production. Refer to Note 7 – Derivative Contracts for the Company's open oil and gas commodity derivative contracts. Revenue Recognition QEP recognizes revenue from the sales of oil and condensate, gas and NGL in the period that the performance obligations are satisfied. QEP's performance obligations are satisfied when the customer obtains control of product, when we have no further obligations to perform related to the sale, when the transaction price has been determined and when collectability is probable. The sales of oil and condensate, gas and NGL are made under contracts with customers, which typically include consideration that is based on pricing tied to local indices and volumes delivered in the current month. Reported revenues include estimates for the two most recent months using published commodity price indexes and volumes supplied by field operators. Performance obligations under our contracts with customers are typically satisfied at a point in time through monthly delivery of oil and condensate, gas and/or NGL. Our contracts with customers typically require payment for oil and condensate, gas and NGL sales within 30 days following the calendar month of delivery. QEP's oil is typically sold at specific delivery points under contract terms that are common in our industry. QEP's gas and NGL are also sold under contract types that are common in our industry; however, under these contracts, the gas and its components, including NGL, may be sold to a single purchaser or the residue gas and NGL may be sold to separate purchasers. Regardless of the contract type, the terms of these contracts compensate the Company for the value of the residue gas and NGL constituent components at market prices for each product. QEP also purchases and resells oil and gas primarily to mitigate losses on unutilized capacity related to firm transportation commitments and storage activities. QEP recognizes revenue from these resale activities in the period that the performance obligations are satisfied. Cash, Cash Equivalents and Restricted Cash Cash equivalents consist principally of highly liquid investments in securities with original maturities of three months or less made through commercial bank accounts that result in available funds the next business day. Restricted cash are funds that are legally or contractually reserved for a specific purpose and therefore not available for immediate or general business use. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the amounts shown in the Consolidated Statements of Cash Flows: December 31, 2018 2017 (in millions) Cash and cash equivalents $ — $ — Restricted cash (1) 28.1 23.4 Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 28.1 $ 23.4 _______________________ (1) As of December 31, 2018 and 2017 , the restricted cash balance related to cash deposited into an escrow account for a title dispute between outside parties in the Williston Basin, and the restricted cash balance is recorded within "Other noncurrent assets" on the Consolidated Balance Sheets. Supplemental cash flow information is shown in the table below: Year Ended December 31, 2018 2017 2016 Supplemental Disclosures: (in millions) Cash paid for interest, net of capitalized interest $ 136.9 $ 134.9 $ 139.1 Cash paid (refund received) for income taxes, net $ 0.8 $ (0.3 ) $ (123.5 ) Non-cash Investing Activities: Change in capital expenditure accrual balance $ (57.4 ) $ 60.2 $ (32.8 ) Accounts Receivable Accounts receivable consists mainly of receivables from oil and gas purchasers and joint interest owners on properties the Company operates. For receivables from joint interest owners, the Company has the ability to withhold future revenue disbursements to recover any non-payment of joint interest billings. Generally, the Company's oil and gas receivables are collected and bad debts are minimal. However, if commodity prices remain low for an extended period of time, the Company could incur increased levels of bad debt expense. Bad debt expense associated with accounts receivable for the years ended December 31, 2018 and 2016 was $0.6 million and $1.8 million , respectively. Recovery of bad debt associated with accounts receivable for the year ended December 31, 2017 was $1.0 million . Bad debt expense or recovery is included in "General and administrative" expense on the Consolidated Statements of Operations. The Company routinely assesses the recoverability of all material trade and other receivables to determine their collectability. The allowance for bad debt expenses was $1.3 million at December 31, 2018 , and $1.6 million at December 31, 2017 . Property, Plant and Equipment Property, plant and equipment balances are stated at historical cost. Material and supplies inventories are valued at the lower of cost or net realizable value. Maintenance and repair costs are expensed as incurred. Significant accounting policies for our property, plant and equipment are as follows: Successful Efforts Accounting for Oil and Gas Operations The Company follows the successful efforts method of accounting for oil and gas property acquisitions, exploration, development and production activities. Under this method, the acquisition costs of proved and unproved properties, successful exploratory wells and development wells are capitalized. Other exploration costs, including geological and geophysical costs, delay rentals and administrative costs associated with unproved property and unsuccessful exploratory well costs are expensed. Costs to operate and maintain wells and field equipment are expensed as incurred. A gain or loss is generally recognized only when an entire field is sold or abandoned, or if the unit-of-production depreciation, depletion and amortization rate would be significantly affected. Capitalized costs of unproved properties are reclassified to proved property when related proved reserves are determined or charged against the impairment allowance when abandoned. Depreciation, Depletion and Amortization (DD&A) Capitalized proved leasehold costs are depleted on a field-by-field basis using the unit-of-production method and the estimated total proved oil and gas reserves. Capitalized costs of exploratory wells that have found proved oil and gas reserves and capitalized development costs are depreciated using the unit-of-production method based on estimated proved developed reserves for a successful effort field. The Company capitalizes an estimate of the fair value of future abandonment costs. DD&A for the Company's remaining properties is generally based upon rates that will systematically charge the costs of assets against income over the estimated useful lives of those assets using the straight-line method. The estimated useful lives of those assets depreciated under the straight-line basis generally range as follows: Buildings 10 to 30 years Leasehold improvements 3 to 10 years Service, transportation and field service equipment 3 to 7 years Furniture and office equipment 3 to 7 years Impairment of Long-Lived Assets Proved oil and gas properties are evaluated on a field-by-field basis for potential impairment. Other properties are evaluated on a specific asset basis or in groups of similar assets, as applicable. Impairment is indicated when a triggering event occurs and/or the sum of the estimated undiscounted future net cash flows of an evaluated asset is less than the asset's carrying value. Triggering events could include, but are not limited to, a reduction of oil and condensate, gas and NGL reserves caused by mechanical problems, faster-than-expected decline of production, lease ownership issues, potential disposition of assets and declines in oil, gas and NGL prices. If impairment is indicated, fair value is estimated using a discounted cash flow approach. Cash flow estimates require forecasts and assumptions for many years into the future for a variety of factors, including commodity prices, operating costs and estimates of proved, probable and possible reserves. The signing of a purchase and sale agreement could also cause the Company to recognize an impairment of proved properties. For assets subject to a purchase and sale agreement, the terms of the purchase and sale agreement are used as an indicator of fair value. If a range is estimated for the amount of possible future cash flows, the fair value of property is measured utilizing a probability-weighted approach whereas the likelihood of possible outcomes is taken into consideration. Specific to the Planned Williston Basin Divestiture, the Company obtained a Black-Scholes-Merton estimate of the value of the contractual rights to receive up to 5.8 million shares of the buyer's common stock at December 31, 2018 . Cash flow estimates relating to future cash flows from probable and possible reserves are reduced by additional risk-weighting factors. Unproved properties are evaluated on a specific asset basis or in groups of similar assets, as applicable. The Company performs periodic assessments of unproved oil and gas properties for impairment and recognizes a loss at the time of impairment. In determining whether an unproved property is impaired, the Company considers numerous factors including, but not limited to, current development and exploration drilling plans, favorable or unfavorable exploration activity on adjacent leaseholds, in-house geologists' evaluation of the lease, future reserve cash flows and the remaining lease term. During the year ended December 31, 2018 , QEP recorded impairment charges of $1,560.9 million , of which $1,559.3 million related to proved and unproved properties impairment as a result of signing purchase and sale agreements for the divestitures of the Williston Basin and Uinta Basin assets. The Williston Basin assets were impaired in the fourth quarter utilizing a probability-weighted assets held and use model, and the Uinta Basin assets were impaired in the second quarter utilizing an assets held for sale model. During the year ended December 31, 2017 , QEP recorded impairment charges of $78.9 million , of which $38.1 million , primarily in the Other Northern area, was related to proved properties due to lower future gas prices, $29.0 million was primarily related to unproved leasehold acreage in the Central Basin Platform (refer to Note 4 – Capitalized Exploratory Well Costs for more information), $6.5 million was related to the impairment of an underground gas storage facility and $5.3 million was related to the impairment of goodwill. During the year ended December 31, 2016 , QEP recorded impairment charges of $1,194.3 million , of which $1,172.7 million was related to proved properties due to lower future oil and gas prices, $17.9 million was related to expiring leaseholds on unproved properties and $3.7 million was related to the impairment of goodwill. Of the $1,172.7 million impairment of proved properties, $1,164.0 million was related to Pinedale properties, $4.7 million related to Uinta Basin properties, $3.4 million related to the Other Northern area and $0.6 million related to QEP's remaining Other Southern properties. Asset Retirement Obligations (ARO) QEP is obligated to fund the costs of disposing of long-lived assets upon their abandonment. The Company's ARO liability applies primarily to abandonment costs associated with oil and gas wells and certain other properties. ARO associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The cost of the tangible asset, including the asset retirement costs, is depreciated over the useful life of the asset. ARO are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company's credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of ARO change, an adjustment is recorded to both the ARO liability and the long-lived asset. Revisions to estimated ARO can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. Refer to Note 5 – Asset Retirement Obligations for more information. Goodwill Goodwill represents the excess of the amount paid over the fair value of assets acquired in a business combination and is not subject to amortization. QEP performs an annual goodwill impairment test by comparing the fair value of a reporting unit with its carry amount, with an impairment charge being recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. QEP determines the fair value of its reporting units in which goodwill is allocated using the income approach in which the fair value is estimated based on the value of expected future cash flows. Key assumptions used in the cash flow model include estimated quantities of oil and condensate, gas and NGL reserves, including both proved reserves and risk-adjusted unproved reserves, and including probable and possible reserves; estimates of market prices considering forward commodity price curves as of the measurement date; estimates of revenue and operating costs over a multi-year period; and estimates of capital costs. During the years ended December 31, 2017 and 2016 , QEP recorded $5.3 million and $3.7 million , respectively, of goodwill. During the years ended December 31, 2017 and 2016 , QEP tested goodwill for impairment, which resulted in a full write down of $5.3 million and $3.7 million , respectively. Litigation and Other Contingencies The Company is involved in various commercial and regulatory claims, litigation and other legal proceedings that arise in the ordinary course of its business. In each reporting period, the Company assesses these claims in an effort to determine the degree of probability and range of possible loss for potential accrual in its Consolidated Financial Statements. The amount of ultimate loss may differ from these estimates. In accordance with ASC 450, Contingencies , an accrual is recorded for a material loss contingency when its occurrence is probable and damages are reasonably estimable based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. Refer to Note 10 – Commitments and Contingencies for more information. QEP accrues material losses associated with environmental obligations when such losses are probable and can be reasonably estimated. Accruals for estimated environmental losses are recognized no later than at the time the remediation feasibility study, or the evaluation of response options, is complete. These accruals are adjusted as more information becomes available or as circumstances change. Future environmental expenditures are not discounted to their present value. Recoveries of environmental costs from other parties are recorded separately as assets at their undiscounted value when receipt of such recoveries is probable. Derivative Contracts QEP has established policies and procedures for managing commodity price volatility through the use of derivative instruments. QEP uses commodity derivative instruments, typically fixed-price swaps and costless collars to realize a known price or price range for a specific volume of production delivered into a regional sales point. QEP's commodity derivative instruments do not require the physical delivery of oil or gas between the parties at settlement. All transactions are settled in cash with one party paying the other for the net difference in prices, multiplied by the contract volume, for the settlement period. QEP does not engage in speculative hedging transactions, nor does it buy and sell energy contracts with the objective of generating profits on short-term differences in price. Additionally, QEP does not currently have any commodity derivative transactions that have margin requirements or collateral provisions that would require payments prior to the scheduled settlement dates. These derivative contracts are recorded in "Realized and unrealized gains (losses) on derivative contracts" on the Consolidated Statements of Operations in the month of settlement and are also marked-to-market monthly. Refer to Note 7 – Derivative Contracts for more information. Credit Risk Management believes that its credit review procedures, loss reserves, cash deposits and investments, and collection procedures have adequately provided for usual and customary credit-related losses. Exposure to credit risk may be affected by extended periods of low commodity prices, as well as the concentration of customers in certain regions due to changes in economic or other conditions. Customers include commercial and industrial enterprises and financial institutions that may react differently to changing conditions. The Company utilizes various processes to monitor and evaluate its credit risk exposure, which include closely monitoring current market conditions and counterparty credit fundamentals, including public credit ratings, where available. Credit exposure is controlled through credit approvals and limits based on counterparty credit fundamentals. Credit exposure is aggregated across all lines of business, including derivatives, physical exposure and short-term cash investments. To further manage the level of credit risk, the Company requests credit support and, in some cases, requests parental guarantees, letters of credit or prepayment from companies with perceived higher credit risk. Loss reserves are periodically reviewed for adequacy and, if needed, are established on a specific case basis. The Company also has master-netting agreements with some counterparties that allow the offsetting of receivables and payables in a default situation. The Company enters into International Swap Dealers Association Master Agreements (ISDA Agreements) with each of its derivative counterparties prior to executing derivative contracts. The terms of the ISDA Agreements provide the Company and the counterparties with rights of set-off upon the occurrence of defined acts of default by either the Company or counterparty to a derivative contract. The Company routinely monitors and manages its exposure to counterparty risk related to derivative contracts by requiring specific minimum credit standards for all counterparties, actively monitoring counterparties public credit ratings, and avoiding concentration of credit exposure by transacting with multiple counterparties. The Company's commodity derivative contract counterparties are typically financial institutions and energy trading firms with investment-grade credit ratings. The Company's five largest customers accounted for 49% , 59% , and 48% of QEP's revenues for the years ended December 31, 2018 , 2017 and 2016 , respectively. The following table presents the percentages by customer that accounted for 10% or more of QEP's total revenues. Year Ended December 31, 2018 Occidental Energy Marketing 16 % Plains Marketing LP 12 % Year Ended December 31, 2017 Shell Trading Company 14 % Occidental Energy Marketing 13 % Andeavor Logistics LP 13 % BP Energy Company 10 % Plains Marketing LP 10 % Year Ended December 31, 2016 Shell Trading Company 14 % BP Energy Company 10 % Valero Marketing & Supply Company 10 % Income Taxes The amount of income taxes recorded by QEP requires interpretations of complex rules and regulations of various tax jurisdictions throughout the United States. QEP has recognized deferred tax assets and liabilities for temporary differences, operating losses and tax credit carryforwards. Deferred income taxes are provided for the temporary differences arising between the book and tax carrying amounts of assets and liabilities. These differences create taxable or tax-deductible amounts for future periods. ASC 740, Income Taxes, specifies the accounting for uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position to be reflected in the financial statements. If recognized, the tax benefit is measured as the largest amount of tax benefit that is more-likely-than-not to be realized upon ultimate settlement. Management has considered the amounts and the probabilities of the outcomes that could be realized upon ultimate settlement and believes that it is more-likely-than-not that the Company's recorded income tax benefits will be fully realized, except as noted below. As of December 31, 2018 , the Company had a valuation allowance of $82.3 million against the state net operating loss deferred tax asset mainly because management does not forecast future income in Oklahoma, Utah and Louisiana to offset net operating losses before they expire. All federal income tax returns prior to 2018 have been examined by the Internal Revenue Service and are closed. Income tax returns for 2018 have not yet been filed. Most state tax returns for 2015 and subsequent years remain subject to examination. The benefits of uncertain tax positions taken or expected to be taken on income tax returns is recognized in the consolidated financial statements at the largest amount that is more-likely-than-not to be sustained upon examination by the relevant taxing authorities. Our policy is to recognize any interest earned on income tax refunds in "Interest and other income (expense)" on the Consolidated Statements of Operations, any interest expense related to uncertain tax positions in "Interest expense" on the Consolidated Statements of Operations and to recognize any penalties related to uncertain tax positions in "General and administrative" expense on the Consolidated Statements of Operations. As of December 31, 2018 and 2017 , QEP had $19.0 million of unrecognized tax benefits related to uncertain tax positions for asset sales that occurred in 2014, which was included within "Other long-term liabilities" on the Consolidated Balance Sheets. During the years ended December 31, 2018 , 2017 and 2016 , the Company incurred $0.7 million of estimated interest expense related to uncertain tax positions. During the year ended December 31, 2016 , the Company incurred $0.6 million of estimated penalties related to uncertain tax positions. In December 2017, the Tax Cuts and Jobs Act (H.R.1) (Tax Legislation) was signed into law, which resulted in significant changes to U.S. federal income tax law. QEP expects that these changes will positively impact QEP's future after-tax earnings in the U.S., primarily due to the lower federal statutory tax rate of 21% compared to 35% . The impact of the Tax Legislation may differ from the statements above due to, among other things, changes in interpretations and assumptions the Company has made and actions the Company may take as a result of the Tax Legislation. Additionally, guidance issued by the relevant regulatory authorities regarding the Tax Legislation may materially impact QEP's financial statements. As additional guidance to the Tax Legislation is published in the form of Treasury Regulations and other IRS communications, the Company will monitor, assess, and determine the impact of these communications on the Company's consolidated financial statements and operations. In addition to the Tax Legislation, QEP is continuing to monitor proposed regulations regarding the 163(j) Limitation on Deduction for Business Interest Expense, which when finalized, could require QEP to re-characterize the Company's deferred tax assets, resulting in changes in QEP's income tax disclosures. QEP expects the impact to the Company's results of operations to be immaterial. Treasury Stock We record treasury stock purchases at cost, which includes incremental direct transaction costs. Amounts are recorded as a reduction in shareholders' equity in the Consolidated Balance Sheets. QEP acquires treasury stock from stock forfeitures and withholdings and uses the acquired treasury stock for stock option exercises and certain stock grants to employees. Refer to Note 11 – Share-Based Compensation for more information. Earnings (Loss) Per Share Basic earnings (loss) per share (EPS) are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. Diluted EPS includes the potential increase in the number of outstanding shares that could result from the exercise of in-the-money stock options. QEP's unvested restricted share awards are included in weighted-average basic common shares outstanding because, once the shares are granted, the restricted share awards are considered issued and outstanding, the historical forfeiture rate is minimal and the restricted share awards are eligible to receive dividends. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and are included in the computation of earnings (loss) per share pursuant to the two-class method. The Company's unvested restricted share awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared. However, the Company's unvested restricted share awards do not have a contractual obligation to share in losses of the Company. The Company's unexercised stock options do not contain rights to dividends. Under the two-class method, the earnings used to determine basic earnings (loss) per common share are reduced by an amount allocated to participating securities. When the Company records a net loss, none of the loss is allocated to the participating securities since the securities are not obligated to share in Company losses. Use of the two-class method has an insignificant impact on the calculation of basic and diluted earnings (loss) per common share. For the years ended December 31, 2018 and 2017 , there were no anti-dilutive shares. For the year ended December 31, 2016 , there were 0.1 million shares not included in diluted common shares outstanding as they were anti-dilutive due to QEP's net loss from continuing operations. The following is a reconciliation of the components of basic and diluted shares used in the EPS calculation: December 31, 2018 2017 2016 (in millions) Weighted-average basic common shares outstanding 237.9 240.6 221.7 Potential number of shares issuable upon exercise of in-the-money stock options under the Long-Term Stock Incentive Plan — — — Average diluted common shares outstanding 237.9 240.6 221.7 Share-Based Compensation QEP issues stock options, restricted share awards and restricted share units to certain officers, employees and non-employee directors under its 2018 Long-Term Incentive Plan (LTIP). QEP uses the Black-Scholes-Merton mathematical model to estimate the fair value of stock options for accounting purposes. The grant date fair value for restricted share awards is determined based on the closing bid price of the Company's common stock on the grant date. Share-based compensation cost for restricted share units is equal to its fair value as of the end of the period and is classified as a liability. QEP uses an accelerated method in recognizing share-based compensation costs for stock options and restricted share awards with graded-vesting periods. Stock options held by employees generally vest in three equal, annual installments and primarily have a term of seven years. Restricted share awards and restricted share units vest in equal installments over a specified number of years after the grant date with the majority vesting in three years. Non-vested restricted share awards have voting and dividend rights; however, sale or transfer is restricted. Employees may elect to defer their grants of restricted share awards and these deferred awards are designated as restricted share units. Restricted share units vest over a three-year period and are deferred into the Company's nonqualified unfunded deferred compensation plan at t |
