Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2019shares | |
Document and Entity Information | |
Entity Registrant Name | California Resources Corp |
Entity Central Index Key | 0001609253 |
Document Type | 10-Q |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q1 |
Document Period End Date | Mar. 31, 2019 |
Amendment Flag | false |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Trading Symbol | CRC |
Entity Common Stock, Shares Outstanding | 48,800,217 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 43 | $ 17 |
Trade receivables | 296 | 299 |
Inventories | 71 | 69 |
Other current assets, net | 167 | 255 |
Total current assets | 577 | 640 |
PROPERTY, PLANT AND EQUIPMENT | 22,734 | 22,523 |
Accumulated depreciation, depletion and amortization | (16,186) | (16,068) |
Total property, plant and equipment, net | 6,548 | 6,455 |
OTHER ASSETS | 105 | 63 |
TOTAL ASSETS | 7,230 | 7,158 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 100 | |
Accounts payable | 304 | 390 |
Accrued liabilities | 285 | 217 |
Total current liabilities | 689 | 607 |
LONG-TERM DEBT | 5,169 | 5,251 |
DEFERRED GAIN AND ISSUANCE COSTS, NET | 203 | 216 |
OTHER LONG-TERM LIABILITIES | 692 | 575 |
MEZZANINE EQUITY | ||
Redeemable noncontrolling interests | 766 | 756 |
EQUITY | ||
Preferred stock (20 million shares authorized at $0.01 par value) no shares outstanding at March 31, 2019 and December 31, 2018 | ||
Common stock (200 million shares authorized at $0.01 par value) outstanding shares (March 31, 2019 - 48,800,217 and December 31, 2018 - 48,650,420) | ||
Additional paid-in capital | 4,989 | 4,987 |
Accumulated deficit | (5,409) | (5,342) |
Accumulated other comprehensive loss | (6) | (6) |
Total equity attributable to common stock | (426) | (361) |
Equity attributable to noncontrolling interests | 137 | 114 |
Total equity | (289) | (247) |
TOTAL LIABILITIES AND EQUITY | $ 7,230 | $ 7,158 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Condensed Consolidated 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 | 48,800,217 | 48,650,420 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
REVENUES AND OTHER | ||
Oil and gas sales | $ 601 | $ 575 |
Net derivative loss from commodity contracts | (89) | (38) |
Other revenue | 178 | 72 |
Total revenues and other | 690 | 609 |
COSTS AND OTHER | ||
Production costs | 233 | 212 |
General and administrative expenses | 83 | 63 |
Depreciation, depletion and amortization | 118 | 119 |
Taxes other than on income | 41 | 38 |
Exploration expense | 10 | 8 |
Other expenses, net | 148 | 61 |
Total costs and other | 633 | 501 |
OPERATING INCOME | 57 | 108 |
NON-OPERATING (LOSS) INCOME | ||
Interest and debt expense, net | (100) | (92) |
Net gain on early extinguishment of debt | 6 | |
Other non-operating expenses | (7) | (7) |
(LOSS) INCOME BEFORE INCOME TAXES | (44) | 9 |
NET (LOSS) INCOME | (44) | 9 |
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ||
Mezzanine equity | (28) | (14) |
Equity | 5 | 3 |
Net (income) loss attributable to noncontrolling interests | (23) | (11) |
NET LOSS ATTRIBUTABLE TO COMMON STOCK | $ (67) | $ (2) |
Net loss attributable to common stock per share | ||
Basic (in dollars per share) | $ (1.38) | $ (0.05) |
Diluted (in dollars per share) | $ (1.38) | $ (0.05) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Condensed Consolidated Statements of Comprehensive Income | |||
Net (loss) income | $ (44) | $ 9 | |
Net income attributable to noncontrolling interests | (23) | (11) | |
Other comprehensive income items: | |||
Reclassification of realized losses on pension and postretirement benefits to income | [1] | $ 2 | |
Comprehensive loss attributable to common stock | $ (67) | ||
[1] | No associated tax for the three months ended March 31, 2019 and 2018. See Note 10 Pension and Postretirement Benefit Plans for additional information. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Pension and postretirement income, associated tax | $ 0 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net (loss) income | $ (44) | $ 9 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 118 | 119 |
Net derivative loss from commodity contracts | 89 | 38 |
Net proceeds (payments) on settled commodity derivatives | 14 | (31) |
Net gain on early extinguishment of debt | (6) | |
Amortization of deferred gain | (18) | (19) |
Dry hole expenses | 3 | 2 |
Other non-cash charges to income, net | 26 | 14 |
Changes in operating assets and liabilities, net | (24) | 68 |
Net cash provided by operating activities | 158 | 200 |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Capital investments | (131) | (139) |
Changes in capital investment accruals | (47) | 5 |
Acquisitions | (2) | (3) |
Other | (2) | (1) |
Net cash used in investing activities | (182) | (138) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from 2014 Revolving Credit Facility | 615 | 81 |
Repayments of 2014 Revolving Credit Facility | (579) | (444) |
Debt repurchases | (14) | (2) |
Contributions from noncontrolling interest holders, net | 49 | 747 |
Distributions paid to noncontrolling interest holders | (20) | (18) |
Issuance of common stock | 50 | |
Shares canceled for taxes | (1) | (2) |
Net cash provided by financing activities | 50 | 412 |
Increase in cash | 26 | 474 |
Cash-beginning of period | 17 | 20 |
Cash-end of period | $ 43 | $ 494 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Equity - USD ($) $ in Millions | Equity Attributable to Common Stock | Additional Paid-in Capital | Accumulated (Deficit) Earnings | Accumulated Other Comprehensive (Loss) Income | Equity Attributable to Noncontrolling Interests | Total |
Beginning balance at Dec. 31, 2017 | $ (814) | $ 4,879 | $ (5,670) | $ (23) | $ 94 | $ (720) |
Increase (decrease) in Equity | ||||||
Net loss | (2) | (2) | (3) | (5) | ||
Contributions from noncontrolling interest holders, net | 33 | 33 | ||||
Distributions to noncontrolling interest holders | (15) | (15) | ||||
Issuance of common stock | 50 | 50 | 50 | |||
Other comprehensive income | 2 | 2 | 2 | |||
Share-based compensation, net | 1 | 1 | 1 | |||
Ending balance at Mar. 31, 2018 | (763) | 4,930 | (5,672) | (21) | 109 | (654) |
Beginning balance at Dec. 31, 2018 | (361) | 4,987 | (5,342) | (6) | 114 | (247) |
Increase (decrease) in Equity | ||||||
Net loss | (67) | (67) | (5) | (72) | ||
Contributions from noncontrolling interest holders, net | 49 | 49 | ||||
Distributions to noncontrolling interest holders | (21) | (21) | ||||
Share-based compensation, net | 2 | 2 | 2 | |||
Ending balance at Mar. 31, 2019 | $ (426) | $ 4,989 | $ (5,409) | $ (6) | $ 137 | $ (289) |
THE SPIN-OFF AND BASIS OF PRESE
THE SPIN-OFF AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2019 | |
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 California. We were incorporated in Delaware as a wholly owned subsidiary of Occidental Petroleum Corporation (Occidental) on April 23, 2014, and we became an independent, publicly traded company on December 1, 2014. 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 March 31, 2019 and December 31, 2018 and the statements of operations, comprehensive income, cash flows and equity for the three months ended March 31, 2019 and 2018, as applicable. We have eliminated all significant intercompany transactions and accounts. We account for our share of oil and gas exploration and development ventures, in which we have a direct working interest, by reporting our proportionate share of assets, liabilities, revenues, costs and cash flows within the relevant lines on our condensed consolidated balance sheets, statements of operations, equity and cash flows. We have prepared this report pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC) applicable to interim financial information, which permit the 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 financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2018. |
ACCOUNTING AND DISCLOSURE CHANG
ACCOUNTING AND DISCLOSURE CHANGES | 3 Months Ended |
Mar. 31, 2019 | |
ACCOUNTING AND DISCLOSURE CHANGES | |
ACCOUNTING AND DISCLOSURE CHANGES | NOTE 2 ACCOUNTING AND DISCLOSURE CHANGES Recently Adopted Accounting and Disclosure Changes We adopted the Financial Accounting Standards Board's (FASB) new lease accounting rules (ASC 842), as of January 1, 2019, using the modified retrospective approach where the new lease standard is not applied to prior comparative periods, which continue to be presented under accounting standards in effect for those prior periods. Under the modified retrospective approach, we recognized right-of-use assets and lease liabilities of approximately $66 million as of the adoption date. The adoption of the new lease accounting rules did not materially impact our consolidated net earnings and had no impact on cash flows or beginning retained earnings. The new lease standard does not affect our liquidity and has no impact on our debt-covenant calculations under our 2014 Revolving Credit Facility, 2016 Credit Agreement and 2017 Credit Agreement. See Note 12 Leases for more information. |
OTHER INFORMATION
OTHER INFORMATION | 3 Months Ended |
Mar. 31, 2019 | |
OTHER INFORMATION | |
OTHER INFORMATION | NOTE 3 OTHER INFORMATION Cash at March 31, 2019 and December 31, 2018 included approximately $26 million and $2 million, respectively, that is restricted for capital investments and distributions to a joint venture (JV) partner. Other current assets, net as of March 31, 2019 and December 31, 2018 consisted of the following: March 31, December 31, 2019 2018 (in millions) Derivative assets $ 79 $ 168 Amounts due from joint interest partners 68 68 Prepaid expenses 20 16 Other — 3 Other current assets, net $ 167 $ 255 Accrued liabilities as of March 31, 2019 and December 31, 2018 consisted of the following: March 31, December 31, 2019 2018 (in millions) Accrued employee-related costs $ 69 $ 109 Accrued interest 56 15 Accrued taxes other than on income 51 38 Asset retirement obligation 32 31 Operating lease liability 27 — Accrued distribution to JV partner 19 — Other 31 24 Accrued liabilities $ 285 $ 217 Other long-term liabilities included asset retirement obligations (ARO) of $490 million and $402 million at March 31, 2019 and December 31, 2018, respectively. As of March 31, 2019, the timing of our cash flows and additional testing costs associated with our future retirement activities were adjusted as a result of the enactment of new regulations, which resulted in an $87 million increase in the aggregate amount of our ARO. The Office of Administrative Law approved the Division of Oil, Gas, and Geothermal Resources' idle well management regulations on March 20, 2019, with an effective date of April 1, 2019. 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 U.S. federal and state income tax payments during the three months ended March 31, 2019 and 2018. Interest paid, net of capitalized amounts, totaled approximately $69 million and $60 million for the three months ended March 31, 2019 and 2018, respectively. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES | |
INVENTORIES | NOTE 4 INVENTORIES Inventories as of March 31, 2019 and December 31, 2018 consisted of the following: March 31, December 31, 2019 2018 (in millions) Materials and supplies $ 68 $ 65 Finished goods 3 4 Total $ 71 $ 69 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2019 | |
DEBT | |
DEBT | NOTE 5 DEBT As of March 31, 2019 and December 31, 2018, our long-term debt consisted of the following credit agreements, second lien notes and senior notes: Outstanding Principal (in millions) March 31, December 31, 2019 2018 Interest Rate Maturity Security Credit Agreements 2014 Revolving Credit Facility $ 576 $ 540 LIBOR plus 3.25%-4.00% June 30, 2021 Shared First-Priority Lien 2017 Credit Agreement 1,300 1,300 LIBOR plus 4.75% December 31, 2022 (a) Shared First-Priority Lien 2016 Credit Agreement 1,000 1,000 LIBOR plus 10.375% December 31, 2021 First-Priority Lien Second Lien Notes Second Lien Notes 2,049 2,067 8% December 15, 2022 (b) Second-Priority Lien Senior Notes 5% Senior Notes due 2020 100 100 5% January 15, 2020 Unsecured 5½% Senior Notes due 2021 100 100 5.5% September 15, 2021 Unsecured 6% Senior Notes due 2024 144 144 6% November 15, 2024 Unsecured Total Debt 5,269 5,251 Less: Current Maturities (100) — Long-Term Debt $ 5,169 $ 5,251 Note: For a detailed description of our credit agreements, second lien notes and senior notes, please see our most recent Form 10-K for the year ended December 31, 2018. (a) The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million in principal of the 2016 Credit Agreement is outstanding at that time. (b) The Second Lien Notes require principal repayments of approximately $324 million in June 2021, $65 million in December 2021, $67 million in June 2022 and $1,593 million in December 2022. Deferred Gain and Issuance Costs As of March 31, 2019, net deferred gain and issuance costs were $203 million, consisting of $293 million of a deferred gain offset by $90 million of deferred issuance costs and original issue discounts. The December 31, 2018 net deferred gain and issuance costs were $216 million, consisting of $313 million of a deferred gain offset by $97 million of deferred issuance costs and original issue discounts. 2014 Revolving Credit Facility As of March 31, 2019, we had approximately $256 million of available borrowing under our $1 billion revolving credit facility (2014 Revolving Credit Facility), before a $150 million month-end minimum liquidity requirement. Effective May 1, 2019, the borrowing base under this facility was reaffirmed at $2.3 billion. Our 2014 Revolving Credit Facility also includes a sub-limit of $400 million for the issuance of letters of credit. As of March 31, 2019 and December 31, 2018, we had letters of credit outstanding of approximately $168 million and $162 million, respectively. These letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters. Note Repurchases In the first quarter of 2019, we repurchased $18 million in principal amount of our 8% senior secured second lien notes due December 15, 2022 (Second Lien Notes) for $14 million in cash resulting in a pre-tax gain of $6 million, including the effect of unamortized deferred gain and issuance costs. Fair Value 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 March 31, 2019 and December 31, 2018, including the fair value of the variable-rate portion, was approximately $4.8 billion and $4.5 billion, respectively, compared to a carrying value of approximately $5.3 billion in both periods. Other At March 31, 2019, we were in compliance with all financial and other debt covenants. All obligations under our 2014 Revolving Credit Facility, 2017 Credit Agreement and 2016 Credit Agreement (collectively, Credit Facilities) as well as our Second Lien Notes and Senior Notes are guaranteed both fully and unconditionally and jointly and severally by all of our material wholly owned subsidiaries. |
JOINT VENTURES
JOINT VENTURES | 3 Months Ended |
Mar. 31, 2019 | |
JOINT VENTURES | |
JOINT VENTURES | NOTE 6 JOINT VENTURES Noncontrolling Interests The following table presents the changes in noncontrolling interests by JV partners (described in greater detail below), reported in equity and mezzanine equity on the condensed consolidated balance sheets, for the three months ended March 31, 2019 and 2018: Mezzanine Equity – Redeemable Equity Attributable to Noncontrolling Noncontrolling Interest Interests Ares JV BSP JV Total Ares JV (in millions) Balance, December 31, 2018 $ 15 $ 99 $ 114 $ 756 Net (loss) income attributable to noncontrolling interests (3) (2) (5) 28 Contributions from noncontrolling interest holders, net — 49 49 — Distributions accrual — (19) (19) — Distributions to noncontrolling interest holders (2) — (2) (18) Balance, March 31, 2019 $ 10 $ 127 $ 137 $ 766 Balance, December 31, 2017 $ — $ 94 $ 94 $ — Net income (loss) attributable to noncontrolling interests 1 (4) (3) 14 Contributions from noncontrolling interest holders, net 33 — 33 714 Distributions to noncontrolling interest holders (1) (14) (15) (4) Balance, March 31, 2018 $ 33 $ 76 $ 109 $ 724 Ares Management L.P. (Ares) Our condensed consolidated statements of operations reflect the full operations of our midstream JV with ECR Corporate Holdings L.P. (ECR), a portfolio company of Ares Management L.P. (Ares), with ECR's share of net income (loss) reported in net income attributable to noncontrolling interests. ECR's redeemable noncontrolling interests are reported in mezzanine equity due to an embedded optional redemption feature. Benefit Street Partners (BSP) Our consolidated results reflect the full operations of our development JV with Benefit Street Partners (BSP), with BSP's preferred interest reported in equity on our condensed consolidated balance sheets and BSP’s share of net income (loss) being reported in net income attributable to noncontrolling interests on our condensed consolidated statements of operations. BSP contributed $49 million in the first quarter of 2019, net of transaction costs. |
LAWSUITS, CLAIMS, COMMITMENTS A
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | |
LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES | NOTE 7 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. 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. Reserve balances at March 31, 2019 and December 31, 2018 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 would not be material to our consolidated financial position or results of operations. We remain subject to examination by the IRS for calendar years 2016 and 2017. We remain subject to examination by the state of California for the years ended December 31, 2014 through 2017. |
DERIVATIVES
DERIVATIVES | 3 Months Ended |
Mar. 31, 2019 | |
DERIVATIVES | |
DERIVATIVES | NOTE 8 DERIVATIVES General We use a variety of derivative instruments to protect our cash flow, operating margin and capital program from the cyclical nature of commodity prices and interest-rate movements. These derivatives are intended to help us maintain adequate liquidity and improve our ability to comply with the covenants of our Credit Facilities in case of price deterioration. Commodity Price Risk We did not have any commodity derivatives designated as hedges as of and during the three months ended March 31, 2019 and 2018. As part of our hedging program, we held the following Brent-based crude oil contracts as of March 31, 2019: Q2 Q3 Q4 Q1 2019 2019 2019 2020 Sold Calls: Barrels per day 5,000 — — — Weighted-average price per barrel $ 68.45 $ — $ — $ — Purchased Puts: Barrels per day 40,000 40,000 35,000 10,000 Weighted-average price per barrel $ 69.75 $ 73.13 $ 75.71 $ 75.00 Sold Puts: Barrels per day 35,000 40,000 35,000 10,000 Weighted-average price per barrel $ 55.71 $ 57.50 $ 60.00 $ 60.00 The BSP JV entered into crude oil derivatives for insignificant volumes through 2021 that are included in our consolidated results but not in the above table. The BSP JV also entered into natural gas swaps for insignificant volumes for periods through May 2021. The hedges entered into by the BSP JV could affect the timing of the redemption of the JV interest. Interest-Rate Risk In May 2018, we entered into derivative contracts that limit our interest rate exposure with respect to $1.3 billion of our variable-rate indebtedness. These interest-rate contracts reset monthly and require the counterparties to pay any excess interest owed on such amount in the event the one-month LIBOR exceeds 2.75% for any monthly period prior to May 4, 2021. Fair Value of Derivatives Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented. We recognize fair value changes on derivative instruments in each reporting period. The changes in fair value result from the relationship between contract prices or interest rates and the associated forward curves. Commodity Contracts The following table presents the fair values (at gross and net) of our outstanding commodity derivatives as of March 31, 2019 and December 31, 2018 (in millions): March 31, 2019 Gross Gross Net Fair Value Amounts Amounts Presented in Recognized at Offset in the the Balance Balance Sheet Classification Fair Value Balance Sheet Sheet Assets: Other current assets $ 99 $ (20) $ 79 Other assets 2 — 2 Liabilities: Accrued liabilities (24) 20 (4) Other long-term liabilities (1) — (1) Total derivatives $ 76 $ — $ 76 December 31, 2018 Gross Gross Net Fair Value Amounts Amounts Presented in Recognized at Offset in the the Balance Balance Sheet Classification Fair Value Balance Sheet Sheet Assets: Other current assets $ 252 $ (84) $ 168 Other assets 23 (9) 14 Liabilities: Accrued liabilities (87) 84 (3) Other long-term liabilities (10) 9 (1) Total derivatives $ 178 $ — $ 178 Interest-Rate Contracts As of March 31, 2019 and December 31, 2018, we reported the fair value of our interest rate derivatives of $1 million and $4 million, respectively, in other assets on our condensed consolidated balance sheets. For the three months ended March 31, 2019, we reported a $3 million non-cash derivative loss on these contracts in other non-operating expenses on our condensed consolidated statements of operations. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 9 EARNINGS PER SHARE We compute basic and diluted earnings per share (EPS) using the two-class method required for participating securities. Certain of our restricted and performance stock awards are considered participating securities because they have non-forfeitable dividend rights at the same rate as our common stock. Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to common stock in determining net income available to common stockholders. In loss periods, no allocation is made to participating securities because participating securities do not share in losses. For basic EPS, the weighted-average number of common shares outstanding excludes outstanding shares related to unvested restricted stock awards. For diluted EPS, the basic shares outstanding are adjusted by adding all potentially dilutive securities. The following table presents the calculation of basic and diluted EPS for the three months ended March 31, 2019 and 2018: Three months ended March 31, 2019 2018 (in millions, except per-share amounts) Net (loss) income $ (44) $ 9 Net income attributable to noncontrolling interests (23) (11) Net income (loss) attributable to common stock (67) (2) Less: net income allocated to participating securities — — Net loss available to common stockholders $ (67) $ (2) Weighted-average common shares outstanding - basic 48.7 44.2 Basic EPS $ (1.38) $ (0.05) Net (loss) income $ (44) $ 9 Net income attributable to noncontrolling interests (23) (11) Net loss attributable to common stock (67) (2) Less: net income allocated to participating securities — — Net loss available to common stockholders $ (67) $ (2) Weighted-average common shares outstanding - basic 48.7 44.2 Dilutive effect of potentially dilutive securities — — Weighted-average common shares outstanding - diluted 48.7 44.2 Diluted EPS $ (1.38) $ (0.05) Weighted-average anti-dilutive shares (a) 2.5 2.5 (a) Anti-dilutive shares represent potential common shares that are excluded from the computation of diluted EPS. |
PENSION AND POSTRETIREMENT BENE
PENSION AND POSTRETIREMENT BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2019 | |
PENSION AND POSTRETIREMENT BENEFIT PLANS | |
PENSION AND POSTRETIREMENT BENEFIT PLANS | NOTE 10 PENSION 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 March 31, 2019 2018 Pension Postretirement Pension Postretirement Benefit Benefit Benefit Benefit (in millions) Service cost $ — $ 1 $ — $ 1 Interest cost 1 1 1 1 Expected return on plan assets (1) — (1) — Recognized actuarial loss 1 — — — Settlement loss — — 2 — Total $ 1 $ 2 $ 2 $ 2 We did not contribute to our defined benefit pension plan in the three months ended March 31, 2019 and contributed $1 million in the three months ended March 31, 2018. We expect to satisfy minimum funding requirements with contributions of $3 million to our defined benefit pension plans during the remainder of 2019. The 2018 settlement loss, which was reclassified from accumulated other comprehensive income, was associated with early retirements. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 11 REVENUE RECOGNITION We derive substantially all of our revenue from sales of oil, natural gas and natural gas liquids (NGLs), with the remaining revenue generated from sales of electricity and marketing activities related to storage and managing excess pipeline capacity. The following is a description of our principal activities from which we generate revenue. Revenues are recognized when control of promised goods is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods. Commodity Sales Contracts We recognize revenue from the sale of our oil, natural gas and NGL production when delivery has occurred and control passes to the customer. Our commodity contracts are short term, typically less than a year. We consider our performance obligations to be satisfied upon transfer of control of the commodity. Transportation and processing fees incurred by us prior to control being transferred to customers are recorded as a component of other expenses, net on our condensed consolidated statements of operations. Our commodity sales contracts are indexed to a market price or an average index price. We recognize revenue in the amount that we have a right to invoice once we are able to adequately estimate the consideration (i.e., when market prices are known). Our contracts with customers typically require payment within 30 days following invoicing. Electricity The electrical output of the Elk Hills power plant that is not used in our operations is sold to the wholesale power market and to a utility under a power purchase and sales agreement, which includes a capacity payment. Revenue is recognized when obligations under the terms of contracts with our customers are satisfied; generally, this occurs upon delivery of the electricity. We report electricity sales as other revenue on our condensed consolidated statements of operations. Revenue is measured as the amount of consideration we expect to receive based on average index pricing with payment due the month following delivery. Capacity payments are based on a fixed annual amount per kilowatt hour and monthly rates vary based on seasonality. Capacity payments are settled monthly. We consider our performance obligations to be satisfied upon delivery of electricity or as the contracted amount of energy is made available to the customer in the case of capacity payments. Marketing, Trading and Other Marketing, trading and other revenue primarily includes our activities associated with storing, transporting and marketing our production as well as third-party volumes. To transport our natural gas as well as third-party volumes, we have entered into firm pipeline commitments. Depending on market conditions, we may have excess capacity, in which case we may enter into natural gas purchase and sale agreements with third parties. We consider our performance obligations to be satisfied upon transfer of control of the commodity. We have not incurred any significant fees or penalties related to excess capacity on these commitments. We report our marketing and trading activities on a gross basis with purchases and costs reported in other expenses, net and sales recorded in other revenue on our condensed consolidated statements of operations. Disaggregation of Revenue The following table provides disaggregated revenue for the three months ended March 31, 2019 and 2018: Three months ended 2019 2018 (in millions) Oil and gas sales: Oil $ 480 $ 466 NGLs 59 63 Natural gas 62 46 601 575 Other revenue: Electricity 34 24 Marketing, trading and other 144 47 Interest income — 1 178 72 Net derivative loss from commodity contracts (89) (38) Total revenues and other $ 690 $ 609 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
LEASES | |
LEASES | NOTE 12 LEASES On January 1, 2019, we adopted ASC 842 using the modified retrospective approach that requires us to determine our lease balances as of the date of adoption. Prior periods continue to be reported under accounting standards in effect for those periods. We also elected to carry forward our current accounting treatment for land easements on existing agreements. Mineral leases, including oil and natural gas leases, are not included in the scope of ASC 842. We have long-term operating leases for commercial office space, drilling rigs, fleet vehicles and certain facilities. In considering whether a contract contains a lease, we first considered whether there was an identifiable asset and then considered how and for what purpose the asset would be used over the contract term. Our lease liability was determined by measuring the present value of the remaining fixed minimum lease payments as of the date of adoption discounted using our incremental borrowing rate (IBR). In determining our IBR, we considered the average cost of borrowing for publicly traded corporate bond yields, which were adjusted to reflect our credit rating, remaining lease term and frequency of payments. We elected to combine lease and non-lease components in determining fixed minimum lease payments for our drilling rigs and commercial office space. If applicable, fixed minimum lease payments were reduced by lease incentives for our commercial buildings and increased by mobilization and demobilization fees related to our drilling rigs. Certain of our lease agreements include options to renew, which we exercise at our sole discretion, and we did not include these options in determining our fixed minimum lease payments. Our lease liability does not include options to extend or terminate our leases. Our leases do not include options to purchase the leased property. Lease agreements for our fleet vehicles include residual value guarantees, none of which are recognized in our financial statements until the underlying contingency is resolved. For all of our asset classes, we elected to keep leases with an initial term of 12 months or less off the balance sheet and have included costs related to these contracts in our short-term lease cost disclosure below. Contracts with terms of one month or less are excluded from our disclosure of short-term lease costs. For our long-term contracts, variable lease costs were not included in the measurement of our lease balances. Variable lease costs for our drilling rigs included costs to operate, move and repair the rigs. Variable lease costs for certain of our commercial office buildings included utilities and common area maintenance charges. Variable lease costs for our fleet vehicles included other-than-routine maintenance and other various amounts in excess of our fixed minimum rental fee. Our operating lease costs, including amounts capitalized to property, plant and equipment, for the three months ended March 31, 2019 were as follows: March 31, 2019 (in millions) Operating lease cost $ 12 Short-term lease cost 20 Variable lease cost 5 Total lease cost $ 37 We sublease certain commercial office space to third parties where we are the primary obligor under the head lease. The lease terms on those subleases never extend past the term of the head lease and the sublease contains no extension options or residual value guarantees. Sublease income is recognized based on the contract terms and included as a reduction of operating lease cost under our head lease. For the quarter ended March 31, 2019, sublease income was not material to our condensed consolidated financial statements. For the quarter ended March 31, 2019, we paid $9 million and $3 million for our operating lease liabilities, which were reported in net cash used in investing activities and net cash provided by operating activities in our condensed consolidated statement of cash flows, respectively. Our right-of-use assets for operating leases, net of accumulated amortization, were approximately $54 million at March 31, 2019, which is reported in other assets on our consolidated balance sheet. Supplemental balance sheet information related to our operating leases was as follows: March 31, 2019 (in millions) Operating lease right-of-use assets, net $ 54 Current liabilities $ 27 Long-term liabilities 27 Total operating lease liabilities $ 54 Weighted-average remaining lease term (in years) 2.9 Weighted-average discount rate (as a percentage) 11.5 As part of our company-wide consolidation of office space, we will be vacating certain office space in 2019 some of which we may sublease. Should we enter into a sublease agreement, we will evaluate the carrying value of our right-of-use asset, along with the carrying value of related tenant improvements, for impairment based on future identifiable cash flows. For the period ended March 31, 2019, we recognized an impairment of $3 million. We do not expect to terminate leases for vacated office space before the expiration of the lease term. Where we have decided to not sublease vacated commercial office space, we will shorten the useful life of the right-of-use assets and related tenant improvements to recover our remaining costs over our expected period of use. Once the leased office space is abandoned, lease costs will be classified as other non-operating expenses, net on our condensed consolidated statements of operations. Maturities of our operating lease liabilities at March 31, 2019 are as follows: March 31, 2019 (in millions) 2019 $ 27 2020 18 2021 7 2022 4 2023 2 Thereafter 6 Less: Interest (10) Present value of lease liabilities $ 54 We have entered into contracts for commercial office space and facilities that are under construction as of March 31, 2019. These leases are not included in our lease population at March 31, 2019 as the lease terms have not commenced because we do not control the assets during construction. We will apply the new lease standard when the asset is placed in service by us, which is expected to be January and June 2020. Payments for these contracts were included in the table of our future minimum lease payments as of December 31, 2018, which is shown below. At December 31, 2018, future minimum lease payments for noncancelable operating leases under ASC 840 (excluding oil and natural gas and other mineral leases, utilities, taxes, insurance and common area maintenance expenses) were: December 31, 2018 (in millions) 2019 $ 12 2020 8 2021 7 2022 7 2023 6 Thereafter 28 Total $ 68 Rental expense for operating leases under ASC 840 was $2.8 million for the three months ended March 31, 2018. Rental income from subleases for the three months ended March 31, 2018 was not significant. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE 13 INCOME TAXES For the three months ended March 31, 2019 and 2018, we did not provide any current or deferred tax provision or benefit. The difference between our statutory tax rate and our effective tax rate of zero for the periods presented includes changes to maintain our full valuation allowance against our net deferred tax assets given our recent and anticipated future earnings trends. We believe that there is a reasonable possibility that some or all of this allowance could be released in the foreseeable future. However, the amount of the net deferred tax assets considered realizable depends on the level of profitability that we are able to actually achieve. |
ASSET DIVESTITURE
ASSET DIVESTITURE | 3 Months Ended |
Mar. 31, 2019 | |
ASSET DIVESTITURE | |
ASSET DIVESTITURE | NOTE 14 ASSET DIVESTITURE On May 1, 2019, we sold 50% of our working interest and transferred operatorship in certain zones of our Lost Hills field, located in the San Joaquin basin, for total consideration in excess of $200 million, consisting of approximately $168 million in cash and a carried 200-well development program to be drilled through 2023 with an estimated minimum value of $35 million. The proceeds were used to pay down our 2014 Revolving Credit Facility. |
THE SPIN-OFF AND BASIS OF PRE_2
THE SPIN-OFF AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
THE SPIN-OFF AND BASIS OF PRESENTATION | |
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 March 31, 2019 and December 31, 2018 and the statements of operations, comprehensive income, cash flows and equity for the three months ended March 31, 2019 and 2018, as applicable. We have eliminated all significant intercompany transactions and accounts. We account for our share of oil and gas exploration and development ventures, in which we have a direct working interest, by reporting our proportionate share of assets, liabilities, revenues, costs and cash flows within the relevant lines on our condensed consolidated balance sheets, statements of operations, equity and cash flows. We have prepared this report pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC) applicable to interim financial information, which permit the 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 financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2018. |
OTHER INFORMATION (Tables)
OTHER INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
OTHER INFORMATION | |
Schedule of other current assets, net | March 31, December 31, 2019 2018 (in millions) Derivative assets $ 79 $ 168 Amounts due from joint interest partners 68 68 Prepaid expenses 20 16 Other — 3 Other current assets, net $ 167 $ 255 |
Schedule of accrued liabilities | March 31, December 31, 2019 2018 (in millions) Accrued employee-related costs $ 69 $ 109 Accrued interest 56 15 Accrued taxes other than on income 51 38 Asset retirement obligation 32 31 Operating lease liability 27 — Accrued distribution to JV partner 19 — Other 31 24 Accrued liabilities $ 285 $ 217 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES | |
Schedule of Inventories | March 31, December 31, 2019 2018 (in millions) Materials and supplies $ 68 $ 65 Finished goods 3 4 Total $ 71 $ 69 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
DEBT | |
Schedule of Debt | Outstanding Principal (in millions) March 31, December 31, 2019 2018 Interest Rate Maturity Security Credit Agreements 2014 Revolving Credit Facility $ 576 $ 540 LIBOR plus 3.25%-4.00% June 30, 2021 Shared First-Priority Lien 2017 Credit Agreement 1,300 1,300 LIBOR plus 4.75% December 31, 2022 (a) Shared First-Priority Lien 2016 Credit Agreement 1,000 1,000 LIBOR plus 10.375% December 31, 2021 First-Priority Lien Second Lien Notes Second Lien Notes 2,049 2,067 8% December 15, 2022 (b) Second-Priority Lien Senior Notes 5% Senior Notes due 2020 100 100 5% January 15, 2020 Unsecured 5½% Senior Notes due 2021 100 100 5.5% September 15, 2021 Unsecured 6% Senior Notes due 2024 144 144 6% November 15, 2024 Unsecured Total Debt 5,269 5,251 Less: Current Maturities (100) — Long-Term Debt $ 5,169 $ 5,251 Note: For a detailed description of our credit agreements, second lien notes and senior notes, please see our most recent Form 10-K for the year ended December 31, 2018. (a) The 2017 Credit Agreement is subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million in principal of the 2016 Credit Agreement is outstanding at that time. (b) The Second Lien Notes require principal repayments of approximately $324 million in June 2021, $65 million in December 2021, $67 million in June 2022 and $1,593 million in December 2022. |
JOINT VENTURES (Tables)
JOINT VENTURES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
JOINT VENTURES | |
Schedule of changes in noncontrolling interests | Mezzanine Equity – Redeemable Equity Attributable to Noncontrolling Noncontrolling Interest Interests Ares JV BSP JV Total Ares JV (in millions) Balance, December 31, 2018 $ 15 $ 99 $ 114 $ 756 Net (loss) income attributable to noncontrolling interests (3) (2) (5) 28 Contributions from noncontrolling interest holders, net — 49 49 — Distributions accrual — (19) (19) — Distributions to noncontrolling interest holders (2) — (2) (18) Balance, March 31, 2019 $ 10 $ 127 $ 137 $ 766 Balance, December 31, 2017 $ — $ 94 $ 94 $ — Net income (loss) attributable to noncontrolling interests 1 (4) (3) 14 Contributions from noncontrolling interest holders, net 33 — 33 714 Distributions to noncontrolling interest holders (1) (14) (15) (4) Balance, March 31, 2018 $ 33 $ 76 $ 109 $ 724 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
DERIVATIVES | |
Schedule of oil hedge positions | Q2 Q3 Q4 Q1 2019 2019 2019 2020 Sold Calls: Barrels per day 5,000 — — — Weighted-average price per barrel $ 68.45 $ — $ — $ — Purchased Puts: Barrels per day 40,000 40,000 35,000 10,000 Weighted-average price per barrel $ 69.75 $ 73.13 $ 75.71 $ 75.00 Sold Puts: Barrels per day 35,000 40,000 35,000 10,000 Weighted-average price per barrel $ 55.71 $ 57.50 $ 60.00 $ 60.00 |
Schedule of fair value (at gross and net) of outstanding derivatives | The following table presents the fair values (at gross and net) of our outstanding commodity derivatives as of March 31, 2019 and December 31, 2018 (in millions): March 31, 2019 Gross Gross Net Fair Value Amounts Amounts Presented in Recognized at Offset in the the Balance Balance Sheet Classification Fair Value Balance Sheet Sheet Assets: Other current assets $ 99 $ (20) $ 79 Other assets 2 — 2 Liabilities: Accrued liabilities (24) 20 (4) Other long-term liabilities (1) — (1) Total derivatives $ 76 $ — $ 76 December 31, 2018 Gross Gross Net Fair Value Amounts Amounts Presented in Recognized at Offset in the the Balance Balance Sheet Classification Fair Value Balance Sheet Sheet Assets: Other current assets $ 252 $ (84) $ 168 Other assets 23 (9) 14 Liabilities: Accrued liabilities (87) 84 (3) Other long-term liabilities (10) 9 (1) Total derivatives $ 178 $ — $ 178 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE | |
Calculation of basic and diluted EPS | Three months ended March 31, 2019 2018 (in millions, except per-share amounts) Net (loss) income $ (44) $ 9 Net income attributable to noncontrolling interests (23) (11) Net income (loss) attributable to common stock (67) (2) Less: net income allocated to participating securities — — Net loss available to common stockholders $ (67) $ (2) Weighted-average common shares outstanding - basic 48.7 44.2 Basic EPS $ (1.38) $ (0.05) Net (loss) income $ (44) $ 9 Net income attributable to noncontrolling interests (23) (11) Net loss attributable to common stock (67) (2) Less: net income allocated to participating securities — — Net loss available to common stockholders $ (67) $ (2) Weighted-average common shares outstanding - basic 48.7 44.2 Dilutive effect of potentially dilutive securities — — Weighted-average common shares outstanding - diluted 48.7 44.2 Diluted EPS $ (1.38) $ (0.05) Weighted-average anti-dilutive shares (a) 2.5 2.5 (a) Anti-dilutive shares represent potential common shares that are excluded from the computation of diluted EPS. |
PENSION AND POSTRETIREMENT BE_2
PENSION AND POSTRETIREMENT BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
PENSION AND POSTRETIREMENT BENEFIT PLANS | |
Components of the net periodic benefit costs | Three months ended March 31, 2019 2018 Pension Postretirement Pension Postretirement Benefit Benefit Benefit Benefit (in millions) Service cost $ — $ 1 $ — $ 1 Interest cost 1 1 1 1 Expected return on plan assets (1) — (1) — Recognized actuarial loss 1 — — — Settlement loss — — 2 — Total $ 1 $ 2 $ 2 $ 2 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
REVENUE RECOGNITION | |
Schedule of disaggregated revenue | The following table provides disaggregated revenue for the three months ended March 31, 2019 and 2018: Three months ended 2019 2018 (in millions) Oil and gas sales: Oil $ 480 $ 466 NGLs 59 63 Natural gas 62 46 601 575 Other revenue: Electricity 34 24 Marketing, trading and other 144 47 Interest income — 1 178 72 Net derivative loss from commodity contracts (89) (38) Total revenues and other $ 690 $ 609 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
LEASES | |
Schedule of operating lease costs, including amounts capitalized to property, plant and equipment | March 31, 2019 (in millions) Operating lease cost $ 12 Short-term lease cost 20 Variable lease cost 5 Total lease cost $ 37 |
Schedule of supplemental balance sheet information related to operating leases | March 31, 2019 (in millions) Operating lease right-of-use assets, net $ 54 Current liabilities $ 27 Long-term liabilities 27 Total operating lease liabilities $ 54 Weighted-average remaining lease term (in years) 2.9 Weighted-average discount rate (as a percentage) 11.5 |
Schedule of maturities of our operating lease liabilities | March 31, 2019 (in millions) 2019 $ 27 2020 18 2021 7 2022 4 2023 2 Thereafter 6 Less: Interest (10) Present value of lease liabilities $ 54 |
Schedule of future minimum lease payments for noncancelable operating leases | At December 31, 2018, future minimum lease payments for noncancelable operating leases under ASC 840 (excluding oil and natural gas and other mineral leases, utilities, taxes, insurance and common area maintenance expenses) were: December 31, 2018 (in millions) 2019 $ 12 2020 8 2021 7 2022 7 2023 6 Thereafter 28 Total $ 68 |
ACCOUNTING AND DISCLOSURE CHA_2
ACCOUNTING AND DISCLOSURE CHANGES - Recently Adopted Accounting and Disclosure Changes (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 |
Recently Issued Accounting and Disclosure Changes | ||
Right-of-use asset | $ 54 | |
Operating lease liability | $ 54 | |
ASU 2016-02 | Adoption Adjustment | ||
Recently Issued Accounting and Disclosure Changes | ||
Right-of-use asset | $ 66 | |
Operating lease liability | $ 66 |
OTHER INFORMATION (Details)
OTHER INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Cash restricted for capital investments and distributions to a joint venture (JV) partner | $ 26 | $ 2 | |
Derivative assets | 79 | 168 | |
Amounts due from joint interest partners | 68 | 68 | |
Prepaid expenses | 20 | 16 | |
Other | 3 | ||
Other current assets, net | 167 | 255 | |
Accrued employee-related costs | 69 | 109 | |
Accrued interest | 56 | 15 | |
Accrued taxes other than on income | 51 | 38 | |
Asset retirement obligation | 32 | 31 | |
Operating lease liability | 27 | ||
Accrued distribution to JV partner | 19 | ||
Other | 31 | 24 | |
Accrued liabilities | 285 | 217 | |
Increase in the aggregate amount of ARO as a result of the adoption of new regulations | 87 | ||
Interest paid, net of capitalized amounts | 69 | $ 60 | |
Other long-term liabilities | |||
Non-current asset retirement obligation | $ 490 | $ 402 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
INVENTORIES | ||
Materials and supplies | $ 68 | $ 65 |
Finished goods | 3 | 4 |
Total | $ 71 | $ 69 |
DEBT - Schedule of long-term de
DEBT - Schedule of long-term debt (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Debt | ||
Total debt | $ 5,269 | $ 5,251 |
Less Current Maturities | (100) | |
Long-term debt | 5,169 | 5,251 |
2014 Revolving Credit Facility (Shared First Priority Lien) | ||
Debt | ||
Total debt | $ 576 | $ 540 |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on LIBOR loans | Minimum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 3.25% | 3.25% |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on LIBOR loans | Maximum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 4.00% | 4.00% |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | Minimum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 2.25% | 2.25% |
2014 Revolving Credit Facility (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | Maximum | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 3.00% | 3.00% |
2017 Credit Agreement (Shared First Priority Lien) | ||
Debt | ||
Total debt | $ 1,300 | $ 1,300 |
2017 Credit Agreement (Shared First Priority Lien) | 91 days prior to maturity of 2016 Credit Agreement | ||
Debt | ||
Period before maturity of the 2016 Credit Agreement notes that triggers accelerated payment | 91 days | 91 days |
Outstanding amount of 2016 Credit Agreement notes that triggers accelerated payment | $ 100 | $ 100 |
2017 Credit Agreement (Shared First Priority Lien) | Applicable margin on LIBOR loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 4.75% | 4.75% |
2017 Credit Agreement (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 3.75% | 3.75% |
2016 Credit Agreement (Shared First Priority Lien) | ||
Debt | ||
Total debt | $ 1,000 | $ 1,000 |
2016 Credit Agreement (Shared First Priority Lien) | Applicable margin on LIBOR loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 10.375% | 10.375% |
2016 Credit Agreement (Shared First Priority Lien) | Applicable margin on Alternate Base Rate loans | ||
Debt | ||
Interest rate added to variable rate basis (as a percent) | 9.375% | 9.375% |
Second Lien Notes (Second Priority Lien) | ||
Debt | ||
Total debt | $ 2,049 | $ 2,067 |
Debt instrument interest rate stated percentage | 8.00% | 8.00% |
Principal amount due by June 2021 | $ 324 | |
Principal amount due by December 2021 | 65 | |
Principal amount due by June 2022 | 67 | |
Principal amount due by December 2022 | 1,593 | |
Senior Notes (Unsecured) | 5% Notes Due 2020 | ||
Debt | ||
Total debt | $ 100 | $ 100 |
Debt instrument interest rate stated percentage | 5.00% | 5.00% |
Senior Notes (Unsecured) | 5.5% Notes Due 2021 | ||
Debt | ||
Total debt | $ 100 | $ 100 |
Debt instrument interest rate stated percentage | 5.50% | 5.50% |
Senior Notes (Unsecured) | 6% Senior Notes due 2024 | ||
Debt | ||
Total debt | $ 144 | $ 144 |
Debt instrument interest rate stated percentage | 6.00% | 6.00% |
DEBT - Deferred Gain and Issuan
DEBT - Deferred Gain and Issuance Costs (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
DEBT | ||
Net deferred gain and issuance costs | $ 203 | $ 216 |
Deferred gains | 293 | 313 |
Deferred issuance costs and original issue discounts | $ 90 | $ 97 |
DEBT - 2014 Revolving Credit Fa
DEBT - 2014 Revolving Credit Facility (Details) - 2014 Revolving Credit Facility - USD ($) $ in Millions | May 01, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Debt | |||
Available borrowing capacity before a month-end minimum liquidity requirement | $ 256 | ||
Maximum borrowing capacity | 1,000 | ||
Financial covenant minimum month end liquidity | 150 | ||
Borrowing base | $ 2,300 | ||
Letters of Credit | |||
Debt | |||
Maximum sub-limit on borrowing capacity for issuance of letters of credit | 400 | $ 400 | |
Aggregate letters of credit issued | $ 168 | $ 162 |
DEBT - Note Repurchases (Detail
DEBT - Note Repurchases (Details) - Second Lien Notes (Second Priority Lien) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Repurchases of debt | ||
Principal amount of debt reduction through payment or repurchase | $ 18 | |
Debt instrument interest rate stated percentage | 8.00% | 8.00% |
Repurchase value of the principal amounts | $ 14 | |
Pre-tax gain on extinguishment of debt, net of a reduction in deferred issuance costs | $ 6 |
DEBT - Fair Value (Details)
DEBT - Fair Value (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
DEBT | ||
Estimated fair value of long-term debt | $ 4,800 | $ 4,500 |
Debt carrying value | $ 5,269 | $ 5,251 |
JOINT VENTURES - Changes in Non
JOINT VENTURES - Changes in Noncontrolling Interests (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stockholders' Equity | ||
Beginning balance | $ (247) | $ (720) |
Net (loss) income attributable to noncontrolling interests | (5) | (3) |
Contributions from noncontrolling interest holders, net | 49 | 33 |
Ending balance | (289) | (654) |
Equity Attributable to Noncontrolling Interests | ||
Stockholders' Equity | ||
Beginning balance | 114 | 94 |
Net (loss) income attributable to noncontrolling interests | (5) | (3) |
Contributions from noncontrolling interest holders, net | 49 | 33 |
Distributions accrual | (19) | |
Distributions to noncontrolling interest holders | (2) | (15) |
Ending balance | 137 | 109 |
Equity Attributable to Noncontrolling Interests | Ares JV | ||
Stockholders' Equity | ||
Beginning balance | 15 | |
Net (loss) income attributable to noncontrolling interests | (3) | 1 |
Contributions from noncontrolling interest holders, net | 33 | |
Distributions to noncontrolling interest holders | (2) | (1) |
Ending balance | 10 | 33 |
Equity Attributable to Noncontrolling Interests | BSP JV | ||
Stockholders' Equity | ||
Beginning balance | 99 | 94 |
Net (loss) income attributable to noncontrolling interests | (2) | (4) |
Contributions from noncontrolling interest holders, net | 49 | |
Distributions accrual | (19) | |
Distributions to noncontrolling interest holders | (14) | |
Ending balance | $ 127 | $ 76 |
JOINT VENTURES - Mezzanine Equi
JOINT VENTURES - Mezzanine Equity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Mezzanine Equity - Redeemable Noncontrolling Interest - Ares | ||
Balance at the beginning of the period | $ 756 | |
Net (loss) income attributable to noncontrolling interests | 28 | $ 14 |
Balance at the end of the period | 766 | |
Mezzanine Equity - Redeemable Noncontrolling Interest - Ares | ||
Mezzanine Equity - Redeemable Noncontrolling Interest - Ares | ||
Balance at the beginning of the period | 756 | |
Net (loss) income attributable to noncontrolling interests | 28 | 14 |
Contributions from noncontrolling interest holders, net | 714 | |
Distributions to noncontrolling interest holders | (18) | (4) |
Balance at the end of the period | $ 766 | $ 724 |
JOINT VENTURES - BSP (Details)
JOINT VENTURES - BSP (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
JOINT VENTURES | ||
Contribution net of transaction costs | $ 49 | $ 747 |
BSP JV | Joint venture with BSP | ||
JOINT VENTURES | ||
Contribution net of transaction costs | $ 49 |
DERIVATIVES - Commodity Price R
DERIVATIVES - Commodity Price Risk (Details) | Mar. 31, 2019bbl / d$ / bbl |
Calls | Sold | Q2 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 5,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 68.45 |
Puts | Purchased | Q2 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 40,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 69.75 |
Puts | Purchased | Q3 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 40,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 73.13 |
Puts | Purchased | Q4 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 35,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 75.71 |
Puts | Purchased | Q1 2020 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 10,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 75 |
Puts | Sold | Q2 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 35,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 55.71 |
Puts | Sold | Q3 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 40,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 57.50 |
Puts | Sold | Q4 2019 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 35,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 60 |
Puts | Sold | Q1 2020 | |
Derivatives | |
Daily Volume (in Bbl) | bbl / d | 10,000 |
Weighted-average price (in dollars per barrel) | $ / bbl | 60 |
DERIVATIVES - Interest-Rate Ris
DERIVATIVES - Interest-Rate Risk (Details) - Interest-rate contract $ in Billions | May 31, 2018USD ($) |
Derivatives | |
Hedged amount for variable-rate indebtedness | $ 1.3 |
One month LIBOR | |
Derivatives | |
Interest rate to be in place to receive payment | 2.75% |
DERIVATIVES - Fair Value (Detai
DERIVATIVES - Fair Value (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Interest Rate Contracts | Other non-operating expense | ||
Fair Value of Derivatives | ||
Non-cash derivative loss | $ 3 | |
Interest Rate Contracts | Other assets | ||
Fair Value of Derivatives | ||
Interest rate derivative assets | 1 | $ 4 |
Presented in the Balance Sheet | Commodity Contracts | ||
Fair Value of Derivatives | ||
Total derivatives | 76 | 178 |
Presented in the Balance Sheet | Commodity Contracts | Other current assets | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | 79 | 168 |
Presented in the Balance Sheet | Commodity Contracts | Other assets | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | 2 | 14 |
Presented in the Balance Sheet | Commodity Contracts | Accrued liabilities | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | (4) | (3) |
Presented in the Balance Sheet | Commodity Contracts | Other long-term liabilities | ||
Fair Value of Derivatives | ||
Net Fair Value Presented in the Balance Sheet | (1) | (1) |
Recognized Fair Value | Commodity Contracts | ||
Fair Value of Derivatives | ||
Total derivatives | 76 | 178 |
Recognized Fair Value | Commodity Contracts | Other current assets | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | 99 | 252 |
Gross Amounts Offset in the Balance Sheet | (20) | (84) |
Recognized Fair Value | Commodity Contracts | Other assets | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | 2 | 23 |
Gross Amounts Offset in the Balance Sheet | (9) | |
Recognized Fair Value | Commodity Contracts | Accrued liabilities | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | (24) | (87) |
Gross Amounts Offset in the Balance Sheet | 20 | 84 |
Recognized Fair Value | Commodity Contracts | Other long-term liabilities | ||
Fair Value of Derivatives | ||
Gross Amounts Recognized at Fair Value | $ (1) | (10) |
Gross Amounts Offset in the Balance Sheet | $ 9 |
EARNINGS PER SHARE - Calculatio
EARNINGS PER SHARE - Calculation of EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Basic EPS calculation | |||
Net (loss) income | $ (44) | $ 9 | |
Net income attributable to noncontrolling interests | (23) | (11) | |
Net income (loss) attributable to common stock | (67) | (2) | |
Net loss available to common stockholders | $ (67) | $ (2) | |
Weighted-average common shares outstanding - basic | 48.7 | 44.2 | |
Basic EPS (in dollars per share) | $ (1.38) | $ (0.05) | |
Diluted EPS calculation | |||
Net (loss) income | $ (44) | $ 9 | |
Net income attributable to noncontrolling interests | (23) | (11) | |
Net loss attributable to common stock | (67) | (2) | |
Net loss available to common stockholders | $ (67) | $ (2) | |
Weighted-average common shares outstanding - basic | 48.7 | 44.2 | |
Weighted-average common shares outstanding - diluted | 48.7 | 44.2 | |
Diluted EPS (in dollars per share) | $ (1.38) | $ (0.05) | |
Weighted-average anti-dilutive shares | [1] | 2.5 | 2.5 |
[1] | Anti-dilutive shares represent potential common shares that are excluded from the computation of diluted EPS. |
PENSION AND POSTRETIREMENT BE_3
PENSION AND POSTRETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net periodic benefit costs: | ||
Employer contributions to pension plan | $ 1 | |
Expected contribution to defined benefit pension plans during the reminder of 2019 | $ 3 | |
Pension Benefit | ||
Net periodic benefit costs: | ||
Interest cost | 1 | 1 |
Expected return on plan assets | (1) | (1) |
Recognized actuarial loss | 1 | |
Settlement loss | 2 | |
Net periodic benefit costs | 1 | 2 |
Postretirement Benefit | ||
Net periodic benefit costs: | ||
Service cost | 1 | 1 |
Interest cost | 1 | 1 |
Net periodic benefit costs | $ 2 | $ 2 |
REVENUE RECOGNITION - Commodity
REVENUE RECOGNITION - Commodity Sales Contracts and Marketing (Details) | 3 Months Ended |
Mar. 31, 2019 | |
REVENUE RECOGNITION | |
Typical term of payment following invoicing | 30 days |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of revenue | ||
Oil and gas sales | $ 601 | $ 575 |
Other revenue | 178 | 72 |
Net derivative loss from commodity contracts | (89) | (38) |
Total revenues and other | 690 | 609 |
Oil | ||
Disaggregation of revenue | ||
Oil and gas sales | 480 | 466 |
NGLs | ||
Disaggregation of revenue | ||
Oil and gas sales | 59 | 63 |
Natural gas | ||
Disaggregation of revenue | ||
Oil and gas sales | 62 | 46 |
Electricity | ||
Disaggregation of revenue | ||
Other revenue | 34 | 24 |
Marketing, trading and other | ||
Disaggregation of revenue | ||
Other revenue | $ 144 | 47 |
Interest income | ||
Disaggregation of revenue | ||
Interest income | $ 1 |
LEASES - Operating lease costs
LEASES - Operating lease costs (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Operating lease costs | |
Operating lease cost | $ 12 |
Short-term Lease, Cost | 20 |
Variable lease cost | 5 |
Total lease cost | 37 |
Investing activities, operating lease liabilities payment | |
Payment of operating lease liabilities reported in net cash used in investing activities | 9 |
Operating activities, operating lease liabilities payment | |
Payment of operating lease liabilities reported in net cash provided by operating activities | $ 3 |
LEASES - Supplement balance she
LEASES - Supplement balance sheet information (Details) $ in Millions | Mar. 31, 2019USD ($) |
LEASES | |
Operating lease right-of-use assets, net | $ 54 |
Current liabilities | 27 |
Long-term liabilities | 27 |
Total operating lease liabilities | $ 54 |
Weighted-average remaining lease term (in years) | 2 years 10 months 24 days |
Weighted-average discount rate (as a percentage) | 11.50% |
LEASES - Operating lease liabil
LEASES - Operating lease liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
LEASES | |
Impairment on right-of-use asset | $ 3 |
Operating lease liabilities | |
2019 | 27 |
2020 | 18 |
2021 | 7 |
2022 | 4 |
2023 | 2 |
Thereafter | 6 |
Less: Interest | (10) |
Present value of lease liabilities | $ 54 |
LEASES - Noncancelable operatin
LEASES - Noncancelable operating leases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2018 | |
Noncancelable operating leases | ||
2019 | $ 12 | |
2020 | 8 | |
2021 | 7 | |
2022 | 7 | |
2023 | 6 | |
Thereafter | 28 | |
Total | $ 68 | |
Rental expense for operating leases | $ 2.8 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
INCOME TAXES | ||
Effective tax rate (as a percent) | 0.00% | 0.00% |
ASSET DIVESTITURE (Details)
ASSET DIVESTITURE (Details) $ in Millions | May 01, 2019USD ($)item |
ASSET DIVESTITURE | |
Working interest in Lost Hills field sold (in percent) | 50.00% |
Total consideration of the sale of Lost Hills field 50% interest | $ 200 |
Consideration in cash in the sale of Lost Hills field 50% interest | $ 168 |
Number of well development plan included in the sale of Lost Host field | item | 200 |
Minimum value of well development plan of Lost Hills field | $ 35 |