Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | California Resources Corp |
Entity Central Index Key | 1,609,253 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 41,100,276 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q2 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2 | $ 12 |
Trade receivables, net | 195 | 200 |
Inventories | 62 | 58 |
Other current assets | 127 | 227 |
Total current assets | 386 | 497 |
PROPERTY, PLANT AND EQUIPMENT | 20,887 | 20,996 |
Accumulated depreciation, depletion and amortization | (14,814) | (14,684) |
Total property, plant and equipment | 6,073 | 6,312 |
OTHER ASSETS | 17 | 244 |
TOTAL ASSETS | 6,476 | 7,053 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 99 | 100 |
Accounts payable | 187 | 257 |
Accrued liabilities | 306 | 222 |
Current income taxes | 26 | |
Total current liabilities | 592 | 605 |
LONG-TERM DEBT - PRINCIPAL AMOUNT | 5,843 | 6,043 |
DEFERRED GAIN AND ISSUANCE COSTS, NET | 456 | 491 |
DEFERRED INCOME TAXES | 45 | |
OTHER LONG-TERM LIABILITIES | 585 | 830 |
EQUITY | ||
Preferred stock (20 million shares authorized at $0.01 par value) no shares outstanding at June 30, 2016 and December 31, 2015 | ||
Common stock (200 million shares authorized at $0.01 par value) outstanding shares (June 30, 2016 - 41,100,276 and December 31, 2015 - 38,818,048) | ||
Additional paid-in capital | 4,837 | 4,782 |
Accumulated deficit | (5,873) | (5,683) |
Accumulated other comprehensive loss | (9) | (15) |
Total equity | (1,045) | (916) |
TOTAL LIABILITIES AND EQUITY | $ 6,476 | $ 7,053 |
Consolidated Condensed Balance3
Consolidated Condensed Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Consolidated Condensed Balance Sheets | ||
Preferred stock, authorized shares | 20,000,000 | 20,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, outstanding shares | 41,100,276 | 38,818,048 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
REVENUES AND OTHER | ||||
Oil and natural gas net sales | $ 404 | $ 621 | $ 733 | $ 1,167 |
Net derivative losses | (118) | (17) | (143) | (18) |
Other revenue | 31 | 30 | 49 | 62 |
Total revenues and other | 317 | 634 | 639 | 1,211 |
COSTS AND OTHER | ||||
Production costs | 188 | 242 | 372 | 484 |
General and administrative expenses | 61 | 85 | 128 | 161 |
Depreciation, depletion and amortization | 138 | 251 | 285 | 504 |
Taxes other than on income | 42 | 53 | 81 | 108 |
Exploration expense | 5 | 7 | 10 | 24 |
Interest and debt expense, net | 74 | 83 | 148 | 162 |
Other (income) expenses, net | (51) | 27 | (117) | 51 |
Total costs and other | 457 | 748 | 907 | 1,494 |
LOSS BEFORE INCOME TAXES | (140) | (114) | (268) | (283) |
Income tax benefit | 46 | 78 | 115 | |
NET LOSS | $ (140) | $ (68) | $ (190) | $ (168) |
Net loss per share of common stock | ||||
Basic (in dollars per share) | $ (3.51) | $ (1.78) | $ (4.85) | $ (4.40) |
Diluted (in dollars per share) | $ (3.51) | (1.78) | $ (4.85) | (4.40) |
Dividends per common share (in dollars per share) | $ 0.01 | $ 0.02 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements of Comprehensive Loss - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Consolidated Condensed Statements of Comprehensive Loss | |||||
Net loss | $ (140) | $ (68) | $ (190) | $ (168) | |
Other comprehensive income (loss) items: | |||||
Pension and postretirement losses | [1] | (3) | (3) | ||
Reclassification to income of realized losses on pension and postretirement | [2] | 3 | 5 | 6 | 5 |
Other comprehensive income (loss), net of tax | 3 | 2 | 6 | 2 | |
Comprehensive loss | $ (137) | $ (66) | $ (184) | $ (166) | |
[1] | No associated tax for the three and six months ended June 30, 2016. Net of tax of $2 million for the three and six months ended June 30, 2015. See Note 9, Retirement and Postretirement Benefit Plans, for additional information. | ||||
[2] | No associated tax for the three and six months ended June 30, 2016. Net of tax of $(3) million for the three and six months ended June 30, 2015, respectively. See Note 9, Retirement and Postretirement Benefit Plans, for additional information. |
Consolidated Condensed Stateme6
Consolidated Condensed Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Condensed Statements of Comprehensive Loss | ||||
Pension and postretirement losses, tax | $ 0 | $ 2 | $ 0 | $ 2 |
Reclassification to income of realized losses on pensions and postretirement, tax | $ 0 | $ (3) | $ 0 | $ (3) |
Consolidated Condensed Stateme7
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (190) | $ (168) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 285 | 504 |
Deferred income tax expense (benefit) | (78) | (115) |
Net derivative losses | 143 | 18 |
Proceeds from settled derivatives | 75 | 2 |
Other non-cash (gains) losses in income, net | (150) | 54 |
Dry hole expenses | 7 | |
Changes in operating assets and liabilities, net | (41) | (70) |
Net cash provided by operating activities | 44 | 232 |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Capital investments | (26) | (228) |
Changes in capital investment accruals | (11) | (203) |
Asset divestitures | 19 | |
Acquisitions and other | (9) | |
Net cash used by investing activities | (18) | (440) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from revolving credit facility | 743 | 1,164 |
Repayments of revolving credit facility | (701) | (934) |
Payments on long-term debt | (61) | |
Debt repurchase and amendment costs | (20) | |
Issuance of common stock | 3 | 5 |
Cash dividends paid | (4) | |
Net cash (used) provided by financing activities | (36) | 231 |
(Decrease) increase in cash and cash equivalents | (10) | 23 |
Cash and cash equivalents-beginning of period | 12 | 14 |
Cash and cash equivalents-end of period | $ 2 | $ 37 |
THE SPIN-OFF AND BASIS OF PRESE
THE SPIN-OFF AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2016 | |
THE SPIN-OFF AND BASIS OF PRESENTATION | |
THE SPIN-OFF AND BASIS OF PRESENTATION | NOTE 1 THE SPIN-OFF AND BASIS OF PRESENTATION The Separation and Spin-off We are an independent oil and natural gas exploration and production company operating properties exclusively within the State of California. We were incorporated in Delaware as a wholly-owned subsidiary of Occidental Petroleum Corporation (Occidental) on April 23, 2014, and remained a wholly-owned subsidiary of Occidental until our spin-off on November 30, 2014 (the Spin-off). Prior to the Spin-off, all material existing assets, operations and liabilities of Occidental’s California business were consolidated under us. On November 30, 2014, Occidental distributed shares of our common stock on a pro rata basis to Occidental stockholders and we became an independent, publicly traded company. Occidental initially retained approximately 18.5% of our outstanding shares of common stock, which it distributed to Occidental stockholders on March 24, 2016. Except when the context otherwise requires or where otherwise indicated, all references to ‘‘CRC,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to California Resources Corporation and its subsidiaries. Basis of Presentation In the opinion of our management, the accompanying financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position as of June 30, 2016, and the statements of operations, comprehensive income, and cash flows for the three and six months ended June 30, 2016 and 2015, as applicable. We have eliminated all of our significant intercompany transactions and accounts. The loss and cash flows for the periods ended June 30, 2016 and 2015 are not necessarily indicative of the loss or cash flows you should expect for the full year. Certain prior year amounts have been reclassified to conform to the 2016 presentation. We have prepared this report pursuant to the rules and regulations of the United States Securities and Exchange Commission applicable to interim financial information, which permit omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information not misleading. This Form 10-Q should be read in conjunction with the consolidated and combined financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015. |
ACCOUNTING AND DISCLOSURE CHANG
ACCOUNTING AND DISCLOSURE CHANGES | 6 Months Ended |
Jun. 30, 2016 | |
ACCOUNTING AND DISCLOSURE CHANGES | |
ACCOUNTING AND DISCLOSURE CHANGES | NOTE 2 ACCOUNTING AND DISCLOSURE CHANGES In June 2016, the Financial Accounting Standards Board (FASB) issued rules that change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value. These rules are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of these rules on our financial statements. In April 2016, the FASB issued rules requiring that entities recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, in March 2016, the FASB issued rules intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and whether an entity reports revenue on a gross or net basis. These rules have the same effective date, generally in the first interim period of fiscal 2018, as the related revenue standard issued in 2014. We are currently evaluating the impact of these rules on our financial statements. In March 2016, the FASB simplified several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. These rules are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We early adopted these rules in the second quarter of 2016 with no material changes reflected in our financial statements. In February 2016, the FASB issued rules requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months and to include qualitative and quantitative disclosures with respect to the amount, timing, and uncertainty of cash flows arising from leases. These rules will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. We are currently evaluating the impact of these rules on our financial statements. In January 2016, the FASB issued rules that modify how entities measure equity investments and present changes in the fair value of financial liabilities. Unless the investments qualify for a practicality exception, the new rules require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). Entities will have to record changes in instrument-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. These new rules become effective for fiscal years beginning after December 15, 2017 with no early adoption permitted. We are currently evaluating the impact of these rules, but we do not expect them to have a significant impact on our financial statements. |
OTHER INFORMATION
OTHER INFORMATION | 6 Months Ended |
Jun. 30, 2016 | |
OTHER INFORMATION | |
OTHER INFORMATION | NOTE 3 OTHER INFORMATION Other current assets at June 30, 2016 and December 31, 2015, include amounts due from joint interest partners, net, of approximately $41 million and $42 million and deferred tax assets of $45 million and $59 million. Other long-term liabilities include asset retirement obligations of $330 million and $343 million at June 30, 2016 and December 31, 2015, respectively. Other revenue largely comprised sales of the portion of electricity generated by our power plant that is sold to third parties, and the related costs are included in other (income) expenses. In the quarter and six months ended June 30, 2016, other (income) expenses also included a $31 million of gain from the sale of non-core assets, as well as $44 million and $133 million, respectively, of gains related to the retirement of certain senior unsecured notes. Fair Value of Financial Instruments The carrying amounts of cash and other on-balance sheet financial instruments, other than debt, approximate fair value. Supplemental Cash Flow Information We did not make United States federal and state income tax payments during the six-month periods ended June 30, 2016 and 2015. Interest paid totaled approximately $180 million and $149 million for the six months ended June 30, 2016 and 2015, respectively. Reverse Stock Split Our stockholders approved a reverse stock split at the Company’s annual stockholders’ meeting on May 4, 2016. Following this approval, our board of directors authorized a reverse split using a ratio of one share of common stock for every ten shares then outstanding. The split occurred on May 31, 2016 with trading on a post-split basis commencing the following day. Share and per share amounts included in this report have been restated to reflect this reverse stock split. The split proportionally decreased the number of authorized shares of common stock from 2.0 billion shares to 200 million shares and preferred stock from 200 million to 20 million shares. The compensation committee of our board approved proportionate adjustments to the number of shares outstanding and available for issuance under our stock-based compensation plans and to the exercise price, grant price or purchase price relating to any award under the plans, using the same reverse split ratio, pursuant to existing authority granted to the committee under the plans. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2016 | |
INVENTORIES | |
INVENTORIES | NOTE 4 INVENTORIES Inventories as of June 30, 2016 and December 31, 2015, consisted of the following: June 30, 2016 December 31, 2015 (in millions) Materials and supplies $ $ Finished goods Total $ $ |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2016 | |
DEBT | |
DEBT | NOTE 5 DEBT Debt as of June 30, 2016 and December 31, 2015, consisted of the following: June 30, 2016 December 31, 2015 (in millions) Secured First Lien Bank Debt Revolving Credit Facility $ $ Term Loan Facility Senior Secured Second Lien Notes 8% Notes Due 2022 Senior Unsecured Notes 5% Notes Due 2020 5 ½% Notes Due 2021 6% Notes Due 2024 Total Debt - Principal Amount Less Current Maturities of Long-Term Debt Long-Term Debt - Principal Amount $ $ At June 30, 2016 deferred gain and issuance costs were $456 million net, consisting of $525 million of deferred gains offset by $69 million of deferred issuance costs. The December 31, 2015 deferred gain and issuance costs were $491 million net, consisting of $560 million of deferred gains offset by $69 million of deferred issuance costs. Credit Facilities We have a credit agreement effective through September 2019. The credit agreement provides for (i) a $939 million senior term loan facility (the Term Loan Facility) and (ii) a $1.6 billion senior revolving loan facility (the Revolving Credit Facility and, together with the Term Loan Facility, the Credit Facilities). All borrowings under the Credit Facilities are subject to certain customary conditions. We amended the Credit Facilities effective as of February 2016, to change certain of our financial and other covenants. We further amended these agreements in April 2016 to facilitate certain types of deleveraging transactions. Borrowings under our Credit Facilities are subject to a borrowing base which was reaffirmed at $2.3 billion as of May 2016. We have granted our lenders a first-priority lien in a substantial majority of our upstream assets. The Revolving Credit Facility includes a sub-limit of $400 million for the issuance of letters of credit. As of June 30, 2016 and December 31, 2015, we had outstanding borrowings under our Revolving Credit Facility of $781 million and $739 million, respectively, and outstanding borrowings of $939 million and $1 billion under the Term Loan Facility, respectively. We made two scheduled $25 million quarterly payments on the Term Loan Facility during the quarters ended March 31, 2016 and June 30, 2016 and an $11 million payment from the proceeds of non-core asset sales. Borrowings under the Credit Facilities bear interest, at our election, at either a LIBOR rate or an alternate base rate (ABR) (equal to the greatest of (i) the administrative agent’s prime rate, (ii) the one-month LIBOR rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), in each case plus an applicable margin. This applicable margin is based, while our total leverage ratio exceeds 3.00:1.00, on our borrowing base utilization and will vary from (a) in the case of LIBOR loans, 2.50% to 3.50% and (b) in the case of ABR loans, 1.50% to 2.50%. The unused portion of the Revolving Credit Facility commitments, as limited by the borrowing base, is subject to a commitment fee equal to 0.50% per annum. We also pay customary fees and expenses under the Credit Facilities. Interest on ABR loans is payable quarterly in arrears. Interest on LIBOR loans is payable at the end of each LIBOR period, but not less than quarterly. Our financial performance covenants through December 31, 2016 comprise an obligation to achieve (i) a cumulative minimum EBITDAX during 2016 of $55 million through the first quarter, $130 million through the second quarter, $190 million through the third quarter and $250 million through the fourth quarter and (ii) a trailing four-quarter minimum interest coverage ratio of 2.00:1.00 as of the end of the first quarter of 2016, 1.50:1.00 as of the end of the second quarter, 1.25:1.00 as of the end of the third quarter, 0.70:1.00 as of the end of the fourth quarter and 2.00:1.00 thereafter as of each quarter end. Starting with the end of the first quarter of 2017, we will be subject to a trailing four-quarter maximum first lien senior secured leverage ratio of 2.25:1.00. Oil prices would need to increase significantly in order for us to comply with our covenants at the end of the first quarter of 2017. Unless prices for our products increase significantly, we expect we will need to amend the covenants under our credit facilities before the end of March 2017 in order to remain compliant. We can give no assurances that our lenders will amend our covenants. If we were to breach any of our covenants, our lenders would be permitted to accelerate the principal amount due under the Credit Facilities and foreclose on the assets securing them. If payment were accelerated under our Credit Facilities, it would result in a default under our outstanding notes and permit acceleration and foreclosure on the assets securing the secured notes. Except as otherwise agreed with our lenders for specific transactions, our Credit Facilities require us to apply 100% of the proceeds from asset sales to repay loans outstanding under the Credit Facilities, except that we are permitted to use up to 40% of proceeds from non-borrowing base asset monetizations to repurchase our notes to the extent available at a significant minimum discount to par, as specified in the facilities. In addition, subject to compliance with our indentures, we may incur additional indebtedness to repurchase our notes to the extent available at a specified minimum discount to par, as follows: (i) up to $1 billion, which may be secured by liens that are junior to the liens securing our Credit Facilities, provided that at least 60% of the proceeds from such new debt is used first to repay loans outstanding under the Term Loan Facility, and (ii) up to $200 million, which may be secured by first-priority liens on our non-borrowing base properties. The Credit Facilities also permit us to incur up to an additional $50 million of non-Credit Facility indebtedness, which, subject to compliance with our indentures, may be secured; and the proceeds of which must be applied to repay the Term Loan Facility. We must apply cash on hand in excess of $150 million to repay amounts outstanding under our Revolving Credit Facility. Further, we are restricted from (i) paying dividends or making other distributions to common stockholders and (ii) making capital investments exceeding $100 million during 2016. Our borrowing base is redetermined each May 1 and November 1. The borrowing base will be based upon a number of factors, including commodity prices and reserves levels. Increases in our borrowing base require approval of at least 80% of our revolving lenders, as measured by exposure, while decreases require a two-thirds approval. We and the lenders (requiring a request from the lenders holding two-thirds of the revolving commitments and outstanding loans) each may request a special redetermination once in any period between three consecutive scheduled redeterminations. We will be permitted to have collateral released when both (i) our credit ratings are at least Baa3 from Moody’s and BBB- from S&P, in each case with a stable or better outlook, and (ii) certain permitted liens securing other debt are released. All obligations under the Credit Facilities are guaranteed jointly and severally by all of our material wholly-owned subsidiaries. The assets and liabilities of subsidiaries not guaranteeing the debt are de minimis. Substantially all of the restrictions imposed by the February 2016 amendment to the Credit Facilities, other than the requirement for semiannual borrowing base redeterminations, may terminate in the future if we are able to comply with the financial covenants as they existed prior to giving effect to the amendment. At June 30, 2016, we were in compliance with the financial and other covenants under our Credit Facilities. See Note 11 - Subsequent Events for discussion of our recently announced tender offer, proposed syndicated loan facility and proposed amendment to our Credit Facilities. Senior Notes In October 2014, we issued $5.00 billion in aggregate principal amount of our senior unsecured notes, including $1.00 billion of 5% senior unsecured notes due January 15, 2020 (the 2020 notes), $1.75 billion of 5 ½% senior unsecured notes due September 15, 2021 (the 2021 notes) and $2.25 billion of 6% senior unsecured notes due November 15, 2024 (the 2024 notes and together with the 2020 notes and the 2021 notes, the unsecured notes). The unsecured notes were issued at par and are fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We used the net proceeds from the issuance of the unsecured notes to make a $4.95 billion cash distribution to Occidental in October 2014. In December 2015, we exchanged $534 million, $921 million and $1,358 million in aggregate principal amount of the 2020 notes, the 2021 notes, and the 2024 notes, respectively, for $2.25 billion in aggregate principal amount of newly issued 8% senior secured second lien notes due December 15, 2022 (the 2022 notes). We recorded a deferred gain of approximately $560 million on the debt exchange, which will be amortized using the effective interest rate method over the term of the 2022 notes. Additionally, we incurred approximately $28 million in third-party costs which were fully expensed in 2015. The second lien notes are secured on a second-priority basis, subject to the terms of an intercreditor agreement and collateral trust agreement by a lien on the same collateral used to secure our obligations under our Credit Facilities. During the three months ended March 31, 2016, we repurchased over $100 million in aggregate principal amount of the senior unsecured notes for under $13 million in cash. During the three months ended June 30, 2016, we entered into privately negotiated exchange agreements with a holder of our 6% Senior Notes due 2024 and our 5 ½% Senior Notes due 2021 to exchange a total of approximately 2.1 million shares of our common stock on a post-split basis for notes in the aggregate principal amount of $80 million. We will pay interest semiannually in cash in arrears on January 15 and July 15 for the 2020 notes, on March 15 and September 15 for the 2021 notes, on June 15 and December 15 for the 2022 notes and on May 15 and November 15 for the 2024 notes. The indentures governing the senior unsecured notes and the second lien secured notes each include covenants that, among other things, limit our and our restricted subsidiaries’ ability to incur debt secured by liens. The indentures also restrict our ability to merge or consolidate with, or transfer all or substantially all of our assets to, another entity. These covenants are subject to a number of important qualifications and limitations that are set forth in the indenture. The covenants are not, however, directly linked to measures of our financial performance. In addition, if we experience a “change of control triggering event” (as defined in the indentures) with respect to a series of notes, we will be required, unless we have exercised our right to redeem the notes of such series, to offer to purchase the notes of such series at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest. The indenture governing our second lien secured notes also restricts our ability to sell certain assets and to release collateral from liens securing the second lien secured notes. Other We estimate the fair value of fixed-rate debt, which is classified as Level 1, based on prices from known market transactions for our instruments. The estimated fair value of our debt at June 30, 2016 and December 31, 2015, including the fair value of the variable rate portion, was approximately $4.3 billion and $3.6 billion, respectively, compared to a carrying value of approximately $5.9 billion and $6.1 billion. A one-eighth percent change in the variable interest rates on the borrowings under our Credit Facilities on June 30, 2016, would result in a $2.1 million change in annual interest expense. As of June 30, 2016 and December 31, 2015, we had letters of credit in the aggregate amount of approximately $129 million and $70 million (including $120 million and $49 million under the Revolving Credit Facility), respectively, which were issued to support ordinary course marketing, insurance, regulatory and other matters. |
LAWSUITS, CLAIMS, COMMITMENTS A
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | |
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | NOTE 6 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES We, or certain of our subsidiaries, are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief. On April 21, 2016, a purported class action was filed against us in the United States District Court for the Southern District of New York on behalf of all beneficial owners of our unsecured notes from November 12, 2015 to the present. The complaint alleges that our December 2015 debt exchange excluded non-qualified institutional holders in violation of the Trust Indenture Act of 1939 and related law and, thereby, impaired their rights to receive principal and interest payments. The purported class action seeks declaratory relief that the debt exchange and the liens securing the new notes are null and void and that the debt exchange resulted in a default. The plaintiff also seeks monetary damages and attorneys’ fees. The Company plans to vigorously defend against the claims made by the plaintiff. We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Reserves balances at June 30, 2016 and December 31, 2015 were not material to our balance sheets as of such dates. We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters. We believe that reasonably possible losses that we could incur in excess of reserves accrued on our balance sheet would not be material to our consolidated financial position or results of operations. We, our subsidiaries, or both, have indemnified various parties against specific liabilities those parties might incur in the future in connection with the Spin-off, purchases and other transactions that they have entered into with us. These indemnities include indemnities made to Occidental against certain tax-related liabilities that may be incurred by Occidental relating to the Spin-off and liabilities related to operation of our business while it was still owned by Occidental. As of June 30, 2016, we are not aware of material indemnity claims pending or threatened against the Company. |
DERIVATIVES
DERIVATIVES | 6 Months Ended |
Jun. 30, 2016 | |
DERIVATIVES | |
DERIVATIVES | NOTE 7 DERIVATIVES General We use a variety of derivative instruments intended to improve the effective realized prices for oil and gas and protect our capital program in case of price deterioration. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. We apply hedge accounting when transactions meet specified criteria for cash-flow hedge treatment and management elects and documents such treatment. Otherwise, we recognize any fair value gains or losses, over the remaining term of the hedge instrument, in earnings in the current period. As of June 30, 2016, we did not have any derivatives designated as hedges. Unless otherwise indicated, we use the term “hedge” to describe derivative instruments that are designed to achieve our hedging program goals, even though they are not necessarily accounted for as cash flow or fair value hedges. As part of our hedging program, we entered into a number of derivative transactions that resulted in the following Brent-based crude oil and NYMEX-based gas hedge positions as of June 30, 2016: 2016 2017 2018 Q3 Q4 Q1 - Q4 Q1 - Q4 Crude Oil Calls: Barrels per day Weighted-average price per barrel $ $ $ $ Puts: Barrels per day — Weighted-average price per barrel $ $ $ $ — Swaps: Barrels per day — — Weighted-average price per barrel $ $ $ — $ — Gas Swaps: Millions British Thermal Units (MMBTU) per day — — Weighted-average price per MMBTU $ $ $ — $ — Forward Contracts: MMBTU per day — — — Weighted-average price per MMBTU $ — $ — $ $ — During the three months ended June 30, 2016 and subsequent to that period, we purchased derivative assets that partially reduced our call exposure on 2017 production to a total of 10,500 barrels per day with a weighted-average ceiling of $56.07 and our call exposure on our 2018 production to a total of 21,500 barrels per day with a weighted-average ceiling of $58.21. We will continue to be strategic and opportunistic in implementing our hedging program as market conditions permit. Our objective is to protect against the cyclical nature of commodity prices to protect our cash flows, margins and capital investment program and improve our ability to comply with our credit facility covenants in case of further price deterioration. Fair Value of Derivatives Our commodity derivatives are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are all classified as Level 2 in the required fair value hierarchy for the periods presented. The following table presents the fair values (at gross and net) of our outstanding derivatives as of June 30, 2016 and December 31, 2015 (in millions): June 30, 2016 Balance Sheet Classification Gross Amounts Recognized at Fair Value Gross Amounts Offset in the Balance Sheet Net Fair Value Presented in the Balance Sheet Assets Commodity Contracts Other current assets $ $ $ Liabilities Commodity Contracts Accrued liabilities Commodity Contracts Other long-term liabilities Total derivatives $ $ — $ December 31, 2015 Balance Sheet Classification Gross Amounts Recognized at Fair Value Gross Amounts Offset in the Balance Sheet Net Fair Value Presented in the Balance Sheet Assets Commodity Contracts Other current assets $ $ — $ Liabilities Commodity Contracts Accrued liabilities — Total derivatives $ $ — $ |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 8 EARNINGS PER SHARE We compute earnings per share (EPS) using the two-class method required for participating securities. Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. Restricted stock awards are considered participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares. The denominator of basic EPS is the sum of the weighted-average number of common shares outstanding during the periods presented and vested stock awards that have not yet been issued as common stock; however, it excludes outstanding shares related to unvested stock awards. The denominator of diluted EPS is based on the basic shares outstanding, adjusted for the effect of outstanding option awards, to the extent they are dilutive. The effect of the stock options granted in August 2015 and December 2014 was anti-dilutive for the periods presented. For the three and six months ended June 30, 2016, we issued approximately 86,000 shares and 184,000 shares, respectively, of common stock in connection with our employee stock purchase plan. The effect of the employee stock purchase plan was anti-dilutive for both periods. The following table presents the calculation of basic and diluted EPS for the three- and six-month periods ended June 30, 2016 and 2015: Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 (in millions, except per-share amounts) Basic EPS calculation Net loss $ $ $ $ Net loss allocated to participating securities — — — — Net loss available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Basic EPS $ $ $ $ Diluted EPS calculation Net loss $ $ $ $ Net loss allocated to participating securities — — — — Net loss available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Dilutive effect of potentially dilutive securities — — — — Weighted-average common shares outstanding - diluted Diluted EPS $ $ $ $ |
RETIREMENT AND POSTRETIREMENT B
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2016 | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | NOTE 9 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans: Three months ended June 30, 2016 2015 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) Service cost $ — $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — — Settlement loss — — Total $ $ $ $ Six months ended June 30, 2016 2015 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) Service cost $ $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — Settlement loss — — Total $ $ $ $ We contributed $1 million and $3 million to our defined benefit pension plans during the three months ended June 30, 2016 and 2015, respectively. We contributed $6 million and $3 million to our defined benefit pension plans during the six months ended June 30, 2016 and 2015, respectively. We expect to satisfy minimum funding requirements with contributions of $2 million to our defined benefit pension plans during the remainder of 2016. The 2016 and 2015 settlements were associated with early retirements. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10 INCOME TAXES As a result of the debt exchange in December 2015, we generated cancellation of debt income of $1.39 billion for tax purposes, which represented the excess of the face value of the surrendered notes over the fair value of the newly issued notes at the time of the exchange. The tax gain exceeded our operating loss for the year. We reported the related $336 million of federal and state taxes in current and other long-term liabilities in the accompanying balance sheet at December 31, 2015. During the first quarter of 2016, we reclassified this amount to deferred taxes to reflect the reduction in the tax basis of our assets resulting from the exclusion of the $1.39 billion in cancellation of debt income from our 2015 taxable income. We also recorded a deferred income tax benefit of approximately $78 million to reflect a change in the valuation allowance on our deferred tax assets. During the second quarter of 2016, we recorded a full valuation allowance against the deferred tax assets that resulted from current period tax losses. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 11 SUBSEQUENT EVENTS We announced the commencement on August 1 of our offers to purchase (Tender Offers) up to the combined aggregate principal amount of our notes that can be purchased with $525 million in cash at stated discounts to par. The offers are conditioned on, among other things, (i) entry into, and effectiveness of, an amendment to our Credit Facilities and the availability of sufficient funds from the Credit Facilities necessary to consummate the Tender Offers and (ii) a sufficient aggregate principal amount of our notes being validly tendered (and not validly withdrawn) to result in a minimum of $500 million in aggregate principal amount of our notes being accepted for purchase. Notes accepted for purchase by us would receive base consideration of $510 per $1,000 in principal amount of our 2020 notes accepted, $490 per $1,000 in principal amount of our 2021 notes accepted, $460 per $1,000 in principal amount of our 2024 notes accepted and $625 per $1,000 in principal amount of our 2022 notes accepted, and an early participation premium of $50 per $1,000, plus accrued and unpaid interest. We will not accept more than $200 million in aggregate principal amount of our 2022 notes under the Tender Offers. We are concurrently seeking to amend our Credit Facilities to permit the consummation of these offers and the incurrence of a new syndicated loan facility. We also expect that the amendment will, among other things, reduce the Revolving Credit Facility commitments from $1.6 billion to $1.4 billion, provide covenant relief until the end of the first quarter of 2018 and grant a lien on our substantially all of our assets not currently pledged to secure the Credit Facilities. We are seeking an aggregate principal amount of at least $700 million under the syndicated facility, which will be secured by a first priority lien on the same collateral as used to secure the Credit Facilities, but with “second out” collateral recovery pursuant to an intercreditor agreement between the Credit Facility lenders and the syndicated facility lenders. We expect 25% of the proceeds from the syndicated facility to be used to pay down the Term Loan Facility and the balance to be used to pay down the Revolving Loan Facility. We will consummate the Credit Facility amendment, the syndicated facility and the Tender Offers, if we are able to successfully complete the marketing of the syndicated facility on satisfactory pricing terms and conditions and achieve a successful outcome in the Tender Offers. Our lenders, under the Credit Facilities or under the syndicated facility, may impose additional restrictions that we have not described. Also, we may otherwise alter the terms of these transactions in response to market conditions. |
THE SPIN-OFF AND BASIS OF PRE19
THE SPIN-OFF AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation In the opinion of our management, the accompanying financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position as of June 30, 2016, and the statements of operations, comprehensive income, and cash flows for the three and six months ended June 30, 2016 and 2015, as applicable. We have eliminated all of our significant intercompany transactions and accounts. The loss and cash flows for the periods ended June 30, 2016 and 2015 are not necessarily indicative of the loss or cash flows you should expect for the full year. Certain prior year amounts have been reclassified to conform to the 2016 presentation. We have prepared this report pursuant to the rules and regulations of the United States Securities and Exchange Commission applicable to interim financial information, which permit omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information not misleading. This Form 10-Q should be read in conjunction with the consolidated and combined financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
INVENTORIES | |
Schedule of Inventories | June 30, 2016 December 31, 2015 (in millions) Materials and supplies $ $ Finished goods Total $ $ |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
DEBT | |
Schedule of Long-term Debt | June 30, 2016 December 31, 2015 (in millions) Secured First Lien Bank Debt Revolving Credit Facility $ $ Term Loan Facility Senior Secured Second Lien Notes 8% Notes Due 2022 Senior Unsecured Notes 5% Notes Due 2020 5 ½% Notes Due 2021 6% Notes Due 2024 Total Debt - Principal Amount Less Current Maturities of Long-Term Debt Long-Term Debt - Principal Amount $ $ |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
DERIVATIVES | |
Schedule of current hedge positions | 2016 2017 2018 Q3 Q4 Q1 - Q4 Q1 - Q4 Crude Oil Calls: Barrels per day Weighted-average price per barrel $ $ $ $ Puts: Barrels per day — Weighted-average price per barrel $ $ $ $ — Swaps: Barrels per day — — Weighted-average price per barrel $ $ $ — $ — Gas Swaps: Millions British Thermal Units (MMBTU) per day — — Weighted-average price per MMBTU $ $ $ — $ — Forward Contracts: MMBTU per day — — — Weighted-average price per MMBTU $ — $ — $ $ — |
Gross and net fair values of outstanding derivatives (in millions) | The following table presents the fair values (at gross and net) of our outstanding derivatives as of June 30, 2016 and December 31, 2015 (in millions): June 30, 2016 Balance Sheet Classification Gross Amounts Recognized at Fair Value Gross Amounts Offset in the Balance Sheet Net Fair Value Presented in the Balance Sheet Assets Commodity Contracts Other current assets $ $ $ Liabilities Commodity Contracts Accrued liabilities Commodity Contracts Other long-term liabilities Total derivatives $ $ — $ December 31, 2015 Balance Sheet Classification Gross Amounts Recognized at Fair Value Gross Amounts Offset in the Balance Sheet Net Fair Value Presented in the Balance Sheet Assets Commodity Contracts Other current assets $ $ — $ Liabilities Commodity Contracts Accrued liabilities — Total derivatives $ $ — $ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
EARNINGS PER SHARE | |
Calculation of basic and diluted EPS | Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 (in millions, except per-share amounts) Basic EPS calculation Net loss $ $ $ $ Net loss allocated to participating securities — — — — Net loss available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Basic EPS $ $ $ $ Diluted EPS calculation Net loss $ $ $ $ Net loss allocated to participating securities — — — — Net loss available to common stockholders $ $ $ $ Weighted-average common shares outstanding - basic Dilutive effect of potentially dilutive securities — — — — Weighted-average common shares outstanding - diluted Diluted EPS $ $ $ $ |
RETIREMENT AND POSTRETIREMENT24
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | |
Components of the net periodic benefit cost | Three months ended June 30, 2016 2015 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) Service cost $ — $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — — Settlement loss — — Total $ $ $ $ Six months ended June 30, 2016 2015 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) Service cost $ $ $ $ Interest cost Expected return on plan assets — — Recognized actuarial loss — — Settlement loss — — Total $ $ $ $ |
THE SPIN-OFF AND BASIS OF PRE25
THE SPIN-OFF AND BASIS OF PRESENTATION (Details) | Nov. 30, 2014 |
Spinoff - CRC | Occidental Petroleum And Subsidiaries | |
Separation and Spin Off Transactions | |
Percentage of outstanding shares of common stock initially retained by Occidental | 18.50% |
OTHER INFORMATION (Details)
OTHER INFORMATION (Details) shares in Millions, $ in Millions | May 31, 2016shares | Jun. 30, 2016USD ($)shares | Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($) | May 30, 2016shares | Dec. 31, 2015USD ($)shares |
Interest Paid | $ 180 | $ 149 | ||||
Reverse stock split ratio | 10 | |||||
Common stock, authorized shares | shares | 200 | 200 | 200 | 200 | ||
Preferred stock, authorized shares | shares | 20 | 20 | 20 | 20 | ||
Pre reverse stock split | ||||||
Common stock, authorized shares | shares | 2,000 | |||||
Preferred stock, authorized shares | shares | 200 | |||||
Other (income) expenses | ||||||
Gain on retirement of certain senior unsecured notes | $ 44 | $ 133 | ||||
Gains from the sale of non-core assets | 31 | 31 | ||||
Other current assets | ||||||
Amount due from joint interest partners | 41 | 41 | $ 42 | |||
Deferred tax assets | 45 | 45 | 59 | |||
Other long-term liabilities | ||||||
Asset retirement obligation | $ 330 | $ 330 | $ 343 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
INVENTORIES | ||
Materials and supplies | $ 58 | $ 55 |
Finished goods | 4 | 3 |
Total | $ 62 | $ 58 |
DEBT - Schedule and Agreements
DEBT - Schedule and Agreements (Details) shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2015USD ($) | Oct. 31, 2014USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($)itemshares | Mar. 31, 2016USD ($)item | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | May 31, 2016USD ($) | Feb. 29, 2016USD ($) | |
Debt | ||||||||||
Total Debt - Principal Amount | $ 6,143 | $ 5,942 | $ 5,942 | |||||||
Less Current Maturities of Long-Term Debt | (100) | (99) | (99) | |||||||
Long-Term Debt - Principal Amount | 6,043 | 5,843 | 5,843 | |||||||
Deferred gains | 560 | 525 | 525 | |||||||
Deferred issuance costs | 69 | 69 | 69 | |||||||
Deferred gain and issuance costs, net | 491 | 456 | 456 | |||||||
Financial performance covenants | ||||||||||
Letters of credit issued | 70 | $ 129 | $ 129 | |||||||
June 30 2016 debt for equity exchange | ||||||||||
Debt | ||||||||||
Number of shares issued | shares | 2.1 | |||||||||
Senior Unsecured Notes | ||||||||||
Debt | ||||||||||
Aggregate principal amount issued | $ 5,000 | |||||||||
Net Proceeds from private placement | 4,950 | |||||||||
Cash distribution to Occidental in October 2014 | $ 4,950 | |||||||||
Debt issuance costs | 28 | |||||||||
Gain from retirement of debt recorded as deferred gain | 560 | |||||||||
Senior Secured Second Lien Notes | Senior Unsecured Notes | ||||||||||
Debt | ||||||||||
Percentage of principal amount at which senior notes can be redeemed | 101.00% | |||||||||
Senior Secured Second Lien Notes | 8% Notes Due 2022 | ||||||||||
Debt | ||||||||||
Total Debt - Principal Amount | $ 2,250 | $ 2,250 | $ 2,250 | |||||||
Debt instrument interest rate stated percentage | 8.00% | 8.00% | 8.00% | |||||||
Aggregate principal amount issued | $ 2,250 | |||||||||
Senior Unsecured Notes | ||||||||||
Debt | ||||||||||
Aggregate principal amount of debt instruments repurchased | $ 100 | |||||||||
Debt instrument repurchase amount | 13 | |||||||||
Senior Unsecured Notes | 5% Notes Due 2020 | ||||||||||
Debt | ||||||||||
Total Debt - Principal Amount | $ 433 | $ 392 | $ 392 | |||||||
Debt instrument interest rate stated percentage | 5.00% | 5.00% | 5.00% | 5.00% | ||||||
Aggregate principal amount issued | $ 1,000 | |||||||||
Aggregate principal amount of debt instruments repurchased | $ 534 | |||||||||
Senior Unsecured Notes | 5.5% Notes Due 2021 | ||||||||||
Debt | ||||||||||
Total Debt - Principal Amount | $ 829 | $ 755 | $ 755 | |||||||
Debt instrument interest rate stated percentage | 5.50% | 5.50% | 5.50% | 5.50% | ||||||
Aggregate principal amount issued | $ 1,750 | |||||||||
Aggregate principal amount of debt instruments repurchased | $ 921 | |||||||||
Senior Unsecured Notes | 6% Notes Due 2024 | ||||||||||
Debt | ||||||||||
Total Debt - Principal Amount | $ 892 | $ 825 | $ 825 | |||||||
Debt instrument interest rate stated percentage | 6.00% | 6.00% | 6.00% | 6.00% | ||||||
Aggregate principal amount issued | $ 2,250 | |||||||||
Aggregate principal amount of debt instruments repurchased | $ 1,358 | |||||||||
Senior Unsecured Notes | 5.50% Notes Due 2021 and 6.00% Notes Due 2024 | June 30 2016 debt for equity exchange | ||||||||||
Debt | ||||||||||
Aggregate principal amount of debt instruments repurchased | $ 80 | $ 80 | ||||||||
Credit Facilities | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | $ 2,300 | $ 2,300 | ||||||||
Credit agreement leverage ratio | 3 | 3 | ||||||||
Financial performance covenants | ||||||||||
Cumulative minimum EBITDAX | $ 130 | $ 55 | $ 130 | |||||||
Trailing four-quarter minimum interest coverage ratio | 150.00% | 200.00% | ||||||||
Trailing four-quarter minimum interest coverage ratio after the fourth quarter of 2016 | 2.00% | 2.00% | ||||||||
Trailing four-quarter maximum first lien senior secured leverage ratio starting with the end of the first quarter of 2017 | 225.00% | 225.00% | ||||||||
Credit Facilities | One-Month LIBOR | ||||||||||
Debt | ||||||||||
Interest rate added to variable rate basis(as a percent) | 1.00% | |||||||||
Credit Facilities | Federal fund rate | ||||||||||
Debt | ||||||||||
Interest rate added to variable rate basis(as a percent) | 0.50% | |||||||||
Credit Facilities | Scenario, Forecast | ||||||||||
Financial performance covenants | ||||||||||
Cumulative minimum EBITDAX | $ 250 | $ 190 | ||||||||
Trailing four-quarter minimum interest coverage ratio | 70.00% | 125.00% | ||||||||
Percent of proceeds from asset monetization which must be used to repay loans outstanding under the Credit Facilities | 100.00% | |||||||||
Maximum percent of proceeds from non-borrowing base asset sales that may be used to repurchase notes | 40.00% | |||||||||
Maximum new borrowings (secured by liens on borrowing base that are junior to the Credit Facility liens) that can be used to repurchase notes | $ 1,000 | |||||||||
Minimum percent of the proceeds from new debt which must be used to repay the Term Loan | 60.00% | |||||||||
Maximum new borrowing which can be secured by first-priority liens on non-borrowing base properties | $ 200 | |||||||||
Maximum additional non-Credit Facility indebtedness | 50 | |||||||||
Amount of cash on hand above which amounts owed under the Revolving Credit Facility must be repaid | 150 | |||||||||
Maximum capital investment restriction | $ 100 | |||||||||
Credit Facilities | Minimum | ||||||||||
Debt | ||||||||||
Approval percentage measured by total exposure of lenders for approval of increases in borrowing base | 80.00% | 80.00% | ||||||||
Approval percentage measured by total exposure of lenders for approval of decreases in borrowing base | 67.00% | 67.00% | ||||||||
Credit Facilities | Minimum | LIBOR loans | ||||||||||
Debt | ||||||||||
Interest rate added to variable rate basis(as a percent) | 2.50% | |||||||||
Credit Facilities | Minimum | Alternate Base Rate loans | ||||||||||
Debt | ||||||||||
Interest rate added to variable rate basis(as a percent) | 1.50% | |||||||||
Credit Facilities | Maximum | LIBOR loans | ||||||||||
Debt | ||||||||||
Interest rate added to variable rate basis(as a percent) | 3.50% | |||||||||
Credit Facilities | Maximum | Alternate Base Rate loans | ||||||||||
Debt | ||||||||||
Interest rate added to variable rate basis(as a percent) | 2.50% | |||||||||
Term loan facility | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | $ 939 | $ 939 | ||||||||
Term loan facility | Secured First Lien Bank Debt | ||||||||||
Debt | ||||||||||
Total Debt - Principal Amount | 1,000 | $ 939 | 939 | |||||||
Number of quarterly installment payments made | item | 1 | 1 | ||||||||
Quarterly installment payment of Term Loan | $ 25 | $ 25 | ||||||||
Payment from proceeds of non-core asset sale | 11 | |||||||||
Revolving credit facility | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | 1,600 | $ 1,600 | ||||||||
Commitment fees on unused portion of the Revolving Credit Facility | 0.50% | |||||||||
Revolving credit facility | Secured First Lien Bank Debt | ||||||||||
Debt | ||||||||||
Total Debt - Principal Amount | 739 | 781 | $ 781 | |||||||
Revolving credit facility | Letter of Credit | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | 400 | 400 | ||||||||
Financial performance covenants | ||||||||||
Letters of credit issued | $ 49 | $ 120 | $ 120 |
DEBT - Fair Value and Letters o
DEBT - Fair Value and Letters of Credit (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Other Fixed-Rate and Variable-Rate Debt Disclosures | ||
Estimated fair value of long-term debt | $ 4,300 | $ 3,600 |
Debt carrying value | $ 5,900 | $ 6,100 |
Pro Forma | Credit Facilities | ||
Other Variable-Rate Debt Disclosures | ||
Percentage of change in the variable interest rates | 0.125% | |
Effect of 1/8 percent change in annual interest expense | $ 2.1 |
DERIVATIVES - General (Details)
DERIVATIVES - General (Details) | Jul. 31, 2016bbl / d$ / bbl | Jun. 30, 2016MMBTU / dbbl / d$ / MMBTU$ / bbl |
Crude oil | January through December 2017 production | Subsequent event | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 10,500 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 56.07 | |
Crude oil | January through December 2018 production | Subsequent event | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 21,500 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 58.21 | |
Calls | Crude oil | July through September 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 19,000 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 55.08 | |
Calls | Crude oil | October through December 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 25,000 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 53.62 | |
Calls | Crude oil | January through December 2017 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 12,200 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 55.91 | |
Calls | Crude oil | January through December 2018 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 23,300 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 57.99 | |
Puts | Crude oil | July through September 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 28,000 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 50.65 | |
Puts | Crude oil | October through December 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 3,000 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 50 | |
Puts | Crude oil | January through December 2017 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 4,300 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 50 | |
Swaps | Crude oil | July through September 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 1,000 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 61.25 | |
Swaps | Crude oil | October through December 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | bbl / d | 29,000 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / bbl | 49.43 | |
Swaps | Gas | July through September 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | MMBTU / d | 330 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / MMBTU | 3.13 | |
Swaps | Gas | October through December 2016 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | MMBTU / d | 5,500 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / MMBTU | 3.50 | |
Forward Contracts | Gas | January through December 2017 production | ||
Derivatives | ||
Daily Volume (in Bbl or MMBTU) | MMBTU / d | 6,200 | |
Weighted-Average Price (in dollars per barrel or MMBTU) | $ / MMBTU | 3.53 |
DERIVATIVES - Fair Value (Detai
DERIVATIVES - Fair Value (Details) - Commodity Contracts - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Gross and net fair values of outstanding derivatives (in millions) | ||
Gross Amounts Recognized at Fair Value | $ 86 | |
Net Fair Value Presented in the Balance Sheet | 86 | |
Gross Amounts Recognized at Fair Value | $ (81) | |
Net Fair Value Presented in the Balance Sheet | (81) | |
Other current assets | ||
Gross and net fair values of outstanding derivatives (in millions) | ||
Gross Amounts Recognized at Fair Value | 66 | 87 |
Gross Amounts Offset in the Balance Sheet | (48) | |
Net Fair Value Presented in the Balance Sheet | 18 | 87 |
Accrued liabilities | ||
Gross and net fair values of outstanding derivatives (in millions) | ||
Gross Amounts Recognized at Fair Value | (52) | (1) |
Gross Amounts Offset in the Balance Sheet | 26 | |
Net Fair Value Presented in the Balance Sheet | (26) | $ (1) |
Other long-term liabilities | ||
Gross and net fair values of outstanding derivatives (in millions) | ||
Gross Amounts Recognized at Fair Value | (95) | |
Gross Amounts Offset in the Balance Sheet | 22 | |
Net Fair Value Presented in the Balance Sheet | $ (73) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
EARNINGS PER SHARE | ||||
Common stock issued in connection with employee stock purchase plan | 86,000 | 184,000 | ||
Basic EPS | ||||
Net loss | $ (140) | $ (68) | $ (190) | $ (168) |
Net loss available to common stockholders | $ (140) | $ (68) | $ (190) | $ (168) |
Weighed average common shares outstanding - basic | 39,900,000 | 38,300,000 | 39,200,000 | 38,200,000 |
Basic EPS (in dollars per share) | $ (3.51) | $ (1.78) | $ (4.85) | $ (4.40) |
Diluted EPS | ||||
Net loss | $ (140) | $ (68) | $ (190) | $ (168) |
Net loss available to common stockholders | $ (140) | $ (68) | $ (190) | $ (168) |
Weighed average common shares outstanding - basic | 39,900,000 | 38,300,000 | 39,200,000 | 38,200,000 |
Weighted average common shares outstanding - diluted | 39,900,000 | 38,300,000 | 39,200,000 | 38,200,000 |
Diluted EPS (in dollars per share) | $ (3.51) | $ (1.78) | $ (4.85) | $ (4.40) |
RETIREMENT AND POSTRETIREMENT33
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net periodic benefit costs: | ||||
Employer contributions | $ 1 | $ 3 | $ 6 | $ 3 |
Expected contribution to defined benefit pension plans during the reminder of 2016 | 2 | |||
Pension Benefit | ||||
Net periodic benefit costs: | ||||
Service cost | 1 | 1 | 2 | |
Interest cost | 1 | 1 | 1 | 2 |
Expected return on plan assets | (1) | (1) | (2) | (2) |
Recognized actuarial loss | 1 | 1 | 1 | |
Settlement loss | 3 | 8 | 6 | 8 |
Total | 3 | 10 | 7 | 11 |
Postretirement Benefit | ||||
Net periodic benefit costs: | ||||
Service cost | 1 | 1 | 2 | 2 |
Interest cost | 1 | 1 | 2 | 2 |
Total | $ 2 | $ 2 | $ 4 | $ 4 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Dec. 31, 2015 | Mar. 31, 2016 | |
Cancellation of debt income, for tax purposes | $ 1,390 | |
Deferred tax liabilities | $ 1,390 | |
Deferred income tax benefit due to change in valuation allowance | $ 78 | |
Current and other long-term liabilities | ||
Federal and state taxes reported in current and other long-term liabilities | $ 336 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent event | Aug. 01, 2016USD ($) |
Subsequent events | |
Tender offer purchase price in cash | $ 525,000,000 |
5% Notes Due 2020 | |
Subsequent events | |
Base consideration per $1,000 | 510 |
Principal amount denomination used in tender offers | 1,000 |
Early participation premium per $1,000. | 50 |
5.5% Notes Due 2021 | |
Subsequent events | |
Base consideration per $1,000 | 490 |
Principal amount denomination used in tender offers | 1,000 |
Early participation premium per $1,000. | 50 |
6% Notes Due 2024 | |
Subsequent events | |
Base consideration per $1,000 | 460 |
Principal amount denomination used in tender offers | 1,000 |
Early participation premium per $1,000. | 50 |
8% Notes Due 2022 | |
Subsequent events | |
Base consideration per $1,000 | 625 |
Principal amount denomination used in tender offers | 1,000 |
Early participation premium per $1,000. | 50 |
Revolving credit facility | |
Subsequent events | |
Borrowing commitment prior to expected amendment | 1,600,000,000 |
Borrowing commitment expected after the amendment | 1,400,000,000 |
Syndicated Facility | |
Subsequent events | |
Borrowing commitment sought | $ 700,000,000 |
Proceeds to pay term loan facility (as a percent) | 25.00% |
Minimum | |
Subsequent events | |
Aggregate principal amount of notes to be accepted | $ 500,000,000 |
Maximum | 8% Notes Due 2022 | |
Subsequent events | |
Aggregate principal amount of notes to be accepted | $ 200,000,000 |