Revenue from Contracts with Customers | Note C – Revenue from Contracts with Customers Nature of Goods and Services The Company explores for and produces crude oil, natural gas and natural gas liquids (collectively oil and natural gas) in select basins around the globe. The Company’s revenue from sales of oil and natural gas production activities are primarily subdivided into two key geographic segments: the U.S. and Canada. Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids, and natural gas. For operated oil and natural gas production where the non-operated working interest owner does not take in kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. The exception to this is the reporting of the noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM) as prescribed by ASC 810-10-45. U.S. - In the U.S., the Company primarily produces oil and natural gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico. Revenue is generally recognized when oil and natural gas are transferred to the customer at the delivery point. Revenue recognized is largely index-based with price adjustments for floating market differentials. Canada - In Canada, contracts include long-term floating commodity index priced and natural gas physical forward sales fixed-price contracts. For the offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load, based on the volumes on the bill of lading and point of custody transfer. The Company also purchases natural gas in Canada to meet certain sales commitments. Disaggregation of Revenue The Company reviews performance based on two key geographical segments and between onshore and offshore sources of revenue within these geographies. For the three-month periods ended June 30, 2023, and 2022, the Company recognized $812.9 million and $1,196.2 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas. For the six-month periods ended June 30, 2023, and 2022, the Company recognized $1,652.8 million and $2,067.6 million, respectively, from total revenue from sales to customers, from sales of oil, natural gas liquids and natural gas. Three Months Ended Six Months Ended (Thousands of dollars) 2023 2022 2023 2022 Net crude oil and condensate revenue United States Onshore $ 177,085 $ 264,841 $ 307,166 $ 436,537 Offshore 480,841 612,526 981,151 1,078,147 Canada Onshore 19,306 40,417 41,258 77,114 Offshore 24,871 38,354 41,001 67,186 Other – 13,636 3,644 13,636 Total crude oil and condensate revenue 702,103 969,774 1,374,220 1,672,620 Net natural gas liquids revenue United States Onshore 6,540 18,062 14,810 34,747 Offshore 11,541 18,093 26,170 32,072 Canada Onshore 1,517 5,001 4,980 9,868 Total natural gas liquids revenue 19,598 41,156 45,960 76,687 Net natural gas revenue United States Onshore 4,138 19,034 9,588 30,403 Offshore 14,802 43,567 36,934 69,768 Canada Onshore 59,195 72,768 129,365 131,349 Total natural gas revenue 78,135 135,369 175,887 231,520 Revenue from production 799,836 1,146,299 1,596,067 1,980,827 Sales of purchased natural gas United States Offshore – 181 – 181 Canada Onshore 13,014 49,758 56,751 86,604 Total sales of purchased natural gas 13,014 49,939 56,751 86,785 Total revenue from sales to customers 812,850 1,196,238 1,652,818 2,067,612 Loss on derivative instruments – (103,068) – (423,845) Gain on sale of assets and other income 1,738 7,887 3,486 10,251 Total revenues and other income $ 814,588 $ 1,101,057 $ 1,656,304 $ 1,654,018 Contract Balances and Asset Recognition As of June 30, 2023, and December 31, 2022, receivables from contracts with customers, net of royalties and associated payables, on the balance sheets from continuing operations, were $197.4 million and $201.1 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on a forward-looking expected loss model in accordance with ASU 2016-13, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods. The Company has not entered into any revenue contracts that have financing components as of June 30, 2023. The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts. For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer. Performance Obligations The Company recognizes oil and natural gas revenue when it satisfies a performance obligation by transferring control over a commodity to a customer. Judgment is required to determine whether some customers simultaneously receive and consume the benefit of commodities. As a result of this assessment for the Company, each unit of measure of the specified commodity is considered to represent a distinct performance obligation that is satisfied at a point in time upon the transfer of control of the commodity. For contracts with market or index-based pricing, which represent the majority of sales contracts, the Company has elected the allocation exception and allocates the variable consideration to each single performance obligation in the contract. As a result, there is no price allocation to unsatisfied remaining performance obligations for delivery of commodity product in subsequent periods. The Company has entered into several long-term, fixed-price contracts in Canada. The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the Company’s long-term strategy. As of June 30, 2023, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of more than 12 months starting at the inception of the contract: Current Long-Term Contracts Outstanding at June 30, 2023 Location Commodity End Date Description Approximate Volumes U.S. Natural Gas and NGL Q1 2030 Deliveries from dedicated acreage in Eagle Ford As produced Canada Natural Gas Q4 2023 Contracts to sell natural gas at USD index pricing 25 MMCFD Canada Natural Gas Q4 2023 Contracts to sell natural gas at CAD fixed prices 38 MMCFD Canada Natural Gas Q4 2024 Contracts to sell natural gas at USD index pricing 31 MMCFD Canada Natural Gas Q4 2024 Contracts to sell natural gas at CAD fixed prices 100 MMCFD Canada Natural Gas Q4 2024 Contracts to sell natural gas at CAD fixed prices 34 MMCFD Canada Natural Gas Q4 2024 Contracts to sell natural gas at USD index fixed prices 15 MMCFD Canada Natural Gas Q4 2024 Contracts to sell natural gas at CAD index prices 28 MMCFD Canada Natural Gas Q4 2026 Contracts to sell natural gas at USD index pricing 49 MMCFD Canada Natural Gas Q4 2027 Contracts to sell natural gas at CAD index prices 10 MMCFD Canada NGL Q3 2023 Contracts to sell natural gas liquids at CAD prices 952 BOEPD Fixed price contracts are accounted for as normal sales and purchases for accounting purposes. |