Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Accounting Policies [Abstract] | ' |
Organization and Principles of Consolidation | ' |
Organization and Principles of Consolidation |
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We are an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids (NGLs). Our principal areas of operation include the Mid-Continent, the Rocky Mountains and the onshore Gulf Coast regions of North America. |
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Our consolidated financial statements include the accounts of Newfield Exploration Company, a Delaware corporation, and its subsidiaries. We proportionately consolidate our interests in oil and natural gas exploration and production ventures and partnerships in accordance with industry practice. All significant intercompany balances and transactions have been eliminated. Unless otherwise specified or the context otherwise requires, all references in these notes to “Newfield,” “we,” “us,” “our” or the “Company” are to Newfield Exploration Company and its subsidiaries. |
Discontinued Operations, Policy [Policy Text Block] | ' |
Discontinued Operations |
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Our businesses in Malaysia and China were classified as held-for-sale in the second quarter of 2013. Accordingly, the results of our international operations are reflected separately as discontinued operations in the consolidated statement of operations on a line immediately after "Income (loss) from continuing operations." See Note 3, "Discontinued Operations," for additional disclosures. For information regarding the sale of our Malaysia business, see Note 17, "Subsequent Events." These financial statements and notes are inclusive of our international operations unless otherwise noted. |
Dependence on Oil and Gas Prices | ' |
Dependence on Commodity Prices |
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As an independent oil and natural gas producer, our revenue, profitability and future rate of growth are substantially dependent on prevailing prices for oil, natural gas and NGLs. Historically, the energy markets have been very volatile, and there can be no assurance that commodity prices will not be subject to wide fluctuations in the future. A substantial or extended decline in commodity prices could have a material adverse effect on our financial position, results of operations, cash flows, access to capital and on the quantities of oil, natural gas and NGL reserves that we can economically produce. |
Use of Estimates | ' |
Use of Estimates |
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The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities; disclosure of contingent assets and liabilities at the date of the financial statements; the reported amounts of revenues and expenses during the reporting period; and the quantities and values of proved oil, natural gas and NGL reserves used in calculating depletion and assessing impairment of our oil and gas properties. Actual results could differ significantly from these estimates. Our most significant financial estimates are associated with our estimated proved oil, natural gas and NGL reserves and the fair value of our derivative positions. |
Reclassifications | ' |
Reclassifications and Out-of-Period Adjustments |
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Certain reclassifications have been made to prior years’ reported amounts in order to conform to the current year presentation. These reclassifications, including those related to our discontinued operations disclosed in Note 3, "Discontinued Operations," did not impact our net income (loss), stockholders’ equity or cash flows. |
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The Company's production and other taxes for continuing operations for the year ended December 31, 2013, were reduced by approximately $8 million in the fourth quarter due to a prior period adjustment related to our 2012 and prior ad valorem tax accrual to reflect the actual amounts payable at December 31, 2013. The Company's general and administrative expenses for the year ended December 31, 2013, were reduced by approximately $8 million due to a prior period adjustment related to our 2012 bonus accrual to reflect actual amounts approved and paid in the first quarter of 2013. The Company’s discontinued operations deferred tax expense for the year ended December 31, 2013 was increased by approximately $15 million due to prior period adjustments related to our 2012 repatriation of international earnings and a valuation allowance on a Malaysian deferred tax asset. The Company believes these correcting adjustments in the fourth quarter of 2013 were not material to its prior consolidated financial statements or its quarterly or annual results for the period ended December 31, 2013. |
Revenue Recognition | ' |
Revenue Recognition |
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Substantially all of our oil, natural gas and NGLs are sold at market-based prices to a variety of purchasers under short-term contracts (less than 12 months). We also have long-term contracts in the Uinta Basin at market-based prices. We record revenue when we deliver our production to the customer and collectability is reasonably assured. Revenues from the production of oil, natural gas and NGLs on properties in which we have joint ownership are recorded under the sales method. Under the sales method, the Company and other joint owners may sell more or less than their entitled share of production. Should the Company’s excess sales exceed our share of estimated remaining recoverable reserves, a liability is recorded. Differences between sales and our entitled share of production are not significant. |
Foreign Currency | ' |
Foreign Currency |
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The functional currency for all of our foreign operations is the U.S. dollar. Gains and losses incurred on transactions in a currency other than a country’s functional currency are recorded under the caption “Other income (expense) — Other, net” on our consolidated statement of operations. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
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Cash and cash equivalents include highly liquid investments with a maturity of three months or less when acquired and are stated at cost, which approximates fair value. We invest cash in excess of near-term capital and operating requirements in U.S. Treasury Notes, Eurodollar time deposits and money market funds, which are classified as cash and cash equivalents on our consolidated balance sheet. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Restricted Cash and Deferred Liabilities |
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Restricted cash and the associated deferred liability on our consolidated balance sheet at December 31, 2013, represent a deposit received in 2013 on the pending sale of our Malaysian business. Amounts are contractually restricted until the transaction closes. See Note 17, "Subsequent Events," for further discussion about the close of the sale of the Malaysian business in early February 2014. |
Investments | ' |
Investments |
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Investments consist of debt and equity securities, as well as auction rate securities, a majority of which are classified as “available-for-sale” and stated at fair value. Accordingly, unrealized gains and losses and the related deferred income tax effects are excluded from earnings and reported as a separate component within the consolidated statement of comprehensive income. Realized gains or losses are computed based on specific identification of the securities sold. We regularly assess our investments for impairment and consider any impairment to be other than temporary if we intend to sell the security, it is more likely than not that we will be required to sell the security, or we do not expect to recover our cost of the security. We realized interest income and net gains on our investment securities in 2013, 2012 and 2011 of $3 million, $3 million and $2 million, respectively. |
Allowance for Doubtful Accounts | ' |
Allowance for Doubtful Accounts |
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We routinely assess the recoverability of all material trade and other receivables to determine their collectability. Many of our receivables are from joint interest owners of properties we operate. Thus, we may have the ability to withhold future revenue disbursements to recover any non-payment of joint interest billings. Generally, our oil and gas receivables are collected within 45 to 60 days of production. We accrue a reserve on a receivable when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of the reserve may be reasonably estimated. |
Inventories | ' |
Inventories |
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Inventories primarily consist of tubular goods and well equipment held for use in our oil and natural gas operations and oil produced but not sold in our offshore operations in Malaysia and China. See Note 3, "Discontinued Operations" for details on our international crude oil inventory. Tubular goods and well equipment inventories are carried at the lower of cost or market. At December 31, 2012, we wrote down subsea wellhead inventory that was not included in the sale of our Gulf of Mexico assets. The writedown of $8 million is included in “Operating expenses — Other” on our consolidated statement of operations. |
Oil and Gas Properties | ' |
Oil and Gas Properties |
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We use the full cost method of accounting for our oil and gas producing activities. Under this method, all costs incurred in the acquisition, exploration and development of oil and gas properties, including salaries, benefits and other internal costs directly attributable to these activities, are capitalized into cost centers that are established on a country-by-country basis. We capitalized approximately $145 million, $123 million and $113 million of internal costs in 2013, 2012 and 2011, respectively. Interest expense related to unproved properties also is capitalized into oil and gas properties. |
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Proceeds from the sale of oil and gas properties are applied to reduce the costs in the applicable cost center unless the reduction would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain or loss is recognized. |
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Capitalized costs and estimated future development costs are amortized using a unit-of-production method based on proved reserves associated with the applicable cost center. For each cost center, the net capitalized costs of oil and gas properties are limited to the lower of the unamortized cost or the cost center ceiling. A particular cost center ceiling is equal to the sum of: |
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• | the present value (10% per annum discount rate) of estimated future net revenues from proved reserves using oil, natural gas and NGL reserve estimation requirements, which require use of the unweighted average first-day-of-the-month commodity prices for the prior 12 months, adjusted for market differentials (SEC pricing), applicable to our reserves (including the effects of hedging contracts that are designated for hedge accounting, if any); plus | | | | | | | | | | | |
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• | the cost of properties not included in the costs being amortized, if any; less | | | | | | | | | | | |
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• | related income tax effects. | | | | | | | | | | | |
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If net capitalized costs of oil and gas properties exceed the cost center ceiling, we are subject to a ceiling test writedown to the extent of such excess. If required, a ceiling test writedown reduces earnings and stockholders’ equity in the period of occurrence and, holding other factors constant, results in lower depreciation, depletion and amortization expense in future periods. |
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The risk that we will be required to writedown the carrying value of our oil and gas properties increases when oil, natural gas and NGL prices decrease significantly for a prolonged period of time or if we have substantial downward revisions in our estimated proved reserves. At December 31, 2013, the ceiling value of our reserves was calculated based upon SEC pricing of $3.67 per MMBtu for natural gas and $96.82 per barrel for oil. Using these prices, the cost center ceiling with respect to our domestic full cost pool exceeded the net capitalized costs. As such, no ceiling test writedown was required at December 31, 2013. If there are declines in SEC pricing of oil and natural gas subsequent to December 31, 2013, we may be required to record a ceiling test writedown in future periods. |
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At December 31, 2012, the ceiling value of our reserves was calculated based upon SEC pricing of $2.76 per MMBtu for natural gas and $94.84 per barrel for oil. Using these prices, the unamortized net capitalized costs of our domestic oil and gas properties exceeded the ceiling amount by approximately $1.5 billion ($948 million, after-tax). |
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At December 31, 2011, the ceiling value of our reserves was calculated based upon SEC pricing of $4.12 per MMBtu for natural gas and $96.13 per barrel for oil. Using these prices, the cost center ceiling with respect to our domestic full cost pool exceeded the net capitalized costs. As such, no ceiling test writedown was required at December 31, 2011. |
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See Note 4, “Oil and Gas Assets,” for a detailed discussion regarding our acquisition and sales transactions during 2013, 2012 and 2011. |
Other Property and Equipment | ' |
Other Property and Equipment |
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Furniture, fixtures and equipment are recorded at cost and are depreciated using the straight-line method over their estimated useful lives, which range from three to seven years. Gathering systems and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 25 years. |
Segment Reporting, Policy [Policy Text Block] | ' |
Segment Reporting |
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Our continuing operations are comprised of a single business segment, the domestic exploration, development and production of oil and natural gas. Prior to classifying our international businesses as held-for-sale and discontinued operations, we reported business segments for Malaysia and China. |
Accounting for Asset Retirement Obligations | ' |
Accounting for Asset Retirement Obligations |
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If a reasonable estimate of the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells can be made, we record a liability (an asset retirement obligation or ARO) on our consolidated balance sheet and capitalize the present value of the asset retirement cost in oil and gas properties in the period in which the ARO is incurred. Settlements include payments made to satisfy the AROs, as well as transfer of the ARO to purchasers of our divested properties. |
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In general, the amount of an ARO and the costs capitalized will equal the estimated future cost to satisfy the abandonment obligation assuming normal operation of the asset, using current prices that are escalated by an assumed inflation factor up to the estimated settlement date, which is then discounted back to the date that the abandonment obligation was incurred using an assumed cost of funds for our Company. After recording these amounts, the ARO is accreted to its future estimated value using the same assumed cost of funds, and the original capitalized costs are depreciated on a unit-of-production basis within the related full cost pool. Both the accretion and the depreciation are included in depreciation, depletion and amortization expense on our consolidated statement of operations. |
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The change in our ARO for continuing operations for each of the three years ended December 31, is set forth below: |
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| | 2013 | | 2012 | | 2011 |
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Balance at January 1 | | $ | 100 | | | $ | 106 | | | $ | 96 | |
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Accretion expense | | 8 | | | 8 | | | 8 | |
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Additions | | 12 | | | 20 | | | 5 | |
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Revisions | | 8 | | | 12 | | | 3 | |
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Settlements(1) | | (8 | ) | | (46 | ) | | (6 | ) |
Balance at December 31 | | 120 | | | 100 | | | 106 | |
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Less: Current portion of ARO at December 31 | | (5 | ) | | (5 | ) | | (4 | ) |
Total long-term ARO at December 31 | | $ | 115 | | | $ | 95 | | | $ | 102 | |
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-1 | For the year ended December 31, 2012, settlements include $28 million related to the sale of our Gulf of Mexico assets. See Note 4, “Oil and Gas Assets.” | | | | | | | | | | | |
Contingencies | ' |
Contingencies |
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We are subject to legal proceedings, claims, liabilities and environmental matters that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. See Note 14, “Commitments and Contingencies,” for a more detailed discussion regarding our contingencies. |
Environmental Matters | ' |
Environmental Matters |
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Environmental costs that relate to current operations are expensed as incurred. Remediation costs that relate to an existing condition caused by past operations are accrued when it is probable that those costs will be incurred and can be reasonably estimated based upon evaluations of currently available facts related to each site. |
Income Taxes | ' |
Income Taxes |
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We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined by applying tax regulations existing at the end of a reporting period to the cumulative temporary differences between the tax bases of assets and liabilities and their reported amounts in our financial statements. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. |
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As of December 31, 2013, we did not have a liability for uncertain tax positions, and as such, we did not accrue related interest or penalties. The tax years 2010-2013 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject. |
Stock-Based Compensation | ' |
Stock-Based Compensation |
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We apply a fair value-based method of accounting for stock-based compensation which requires recognition in the financial statements of the cost of services received in exchange for awards of equity instruments based on the grant date fair value of those awards. For equity-based compensation awards, compensation expense is based on the fair value on the grant or modification date and is recognized in our financial statements over the vesting period. We utilize the Black-Scholes option-pricing model to measure the fair value of stock options and a lattice-based model for our performance and market-based restricted stock and restricted stock units. We also have cash-settled restricted stock units as well as a Stockholder Value Appreciation Program that are accounted for under the liability method which requires us to recognize the fair value of each award based on the underlying share price at the end of each period. See Note 11, “Stock-Based Compensation,” for a full discussion of our stock-based compensation. |
Concentration of Credit Risk | ' |
Concentration of Credit Risk |
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We operate a substantial portion of our oil and gas properties. As the operator of a property, we make full payment for costs associated with the property and seek reimbursement from the other working interest owners in the property for their share of those costs. Our joint interest partners consist primarily of independent oil and gas producers. If the oil and gas exploration and production industry in general was adversely affected, the ability of our joint interest partners to reimburse us could be adversely affected. |
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The purchasers of our oil, gas and NGL production consist primarily of independent marketers, major oil and gas companies, refiners and gas pipeline companies. We perform credit evaluations of the purchasers of our production and monitor their financial condition on an ongoing basis. Based on our evaluations and monitoring, we obtain cash escrows, letters of credit or parental guarantees from some purchasers. Historically, we have sold our oil, gas and NGLs to several purchasers. |
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All of our hedging transactions have been carried out in the over-the-counter market. The use of hedging transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions. The counterparties for all of our hedging transactions have an “investment grade” credit rating. We monitor the credit ratings of our hedging counterparties on an ongoing basis. Although we have entered into hedging contracts with multiple counterparties to mitigate our exposure to any individual counterparty, if any of our counterparties were to default on its obligations to us under the hedging contracts or seek bankruptcy protection, it could have a material adverse effect on our ability to fund our planned activities and could result in a larger percentage of our future production being subject to commodity price changes. In addition, in poor economic environments and tight financial markets, the risk of a counterparty default is heightened and fewer counterparties may participate in hedging transactions, which could result in greater concentration of our exposure to any one counterparty or a larger percentage of our future production being subject to commodity price changes. At December 31, 2013, nine of our 15 counterparties accounted for approximately 85% of our estimated future hedged production, with no single counterparty accounting for more than 15% of that production. A portion of our derivative instruments are with lenders under our credit facility. Our credit facility, senior notes, senior subordinated notes and substantially all of our derivative instruments contain provisions that provide for cross defaults and acceleration of those debt and derivative instruments in certain situations. |
Major Customers | ' |
Major Customers |
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Sunoco Logistics Partners Operations GP LLC, Royal Dutch Shell plc and Tesoro Corporation accounted for 13%, 12% and 11% respectively, of our total revenues in 2013. During 2012, Royal Dutch Shell plc, Tesoro Corporation and Big West Oil LLC accounted for 14%, 14% and 10%, respectively, of our total revenues. During 2011, sales of our oil and gas production to Royal Dutch Shell plc and Tesoro Corporation accounted for 12% and 11%, respectively, of our total revenues. We believe that the loss of Sunoco Logistics Partners Operations GP LLC or Royal Dutch Shell plc would not have a material adverse effect on us because alternative purchasers are readily available. An extended loss of Tesoro Corporation or any of our other large purchasers of our Monument Butte field oil production could have a material adverse effect on us because there are limited purchasers of the black and yellow wax crude oil, which we produce from this field. Due to the higher paraffin content of this production, it must remain heated during shipping, so it cannot be transported in conventional pipelines, and there is limited refining capacity for it in the vicinity of our production. In poor economic environments and tight financial markets, there is an increased risk that the current purchasers of our production may fail to satisfy their obligations to us under our crude oil purchase contracts. We cannot guarantee that we will be able to continue to sell to these purchasers or that similar substitute arrangements could be made for sales of our black and yellow wax crude oil with other purchasers if desired. |
Derivative Financial Instruments | ' |
Derivative Financial Instruments |
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Our derivative instruments are recorded on the consolidated balance sheet at fair value as either an asset or a liability with changes in fair value recognized currently in earnings. While all of the derivative instruments that we utilize are to manage the price risk attributable to our expected oil and gas production, we have elected not to designate our derivative instruments as accounting hedges under the accounting guidance. We periodically utilize derivatives to manage our exposure to variable interest rates. |
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The related cash flow impact of our derivative activities are reflected as cash flows from operating activities. See Note 5, “Derivative Financial Instruments,” for a more detailed discussion of our derivative activities. |
Comprehensive Income (Loss) | ' |
Accumulated Other Comprehensive Income |
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At December 31, 2012, accumulated other comprehensive income (“AOCI”) included unrealized losses related to auction rate securities that were deemed to be temporary as the Company had the intent and ability to hold the securities to maturity. As of December 31, 2013, the Company changed its intention and will likely sell the securities for a loss during 2014. As a result, the losses previously accumulated in AOCI related to these securities have been transferred and recognized in the consolidated statement of operations for the year ended December 31, 2013. The change in AOCI for the indicated periods is set forth below: |
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| | Unrealized Gains / (Losses) in |
Accumulated Other Comprehensive Income |
| | Available-for-Sale Securities | | Post-Retirement Benefits | | Total |
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Balance at January 1, 2011 | | $ | (12 | ) | | $ | — | | | $ | (12 | ) |
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Current period other comprehensive income (loss) | | 3 | | | (1 | ) | | 2 | |
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Balance at December 31, 2011 | | (9 | ) | | (1 | ) | | (10 | ) |
Current period other comprehensive income (loss) | | 3 | | | — | | | 3 | |
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Balance at December 31, 2012 | | (6 | ) | | (1 | ) | | (7 | ) |
Other comprehensive income (loss) before reclassifications | | 3 | | | 2 | | | 5 | |
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Amounts reclassified from accumulated other comprehensive income | | 4 | | | — | | | 4 | |
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Net current period other comprehensive income (loss) | | 7 | | | 2 | | | 9 | |
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Balance at December 31, 2013 | | $ | 1 | | | $ | 1 | | | $ | 2 | |
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Offsetting Fair Value | ' |
Offsetting Assets and Liabilities |
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Our derivative financial instruments are subject to master netting arrangements and are reflected on our consolidated balance sheet accordingly. See Note 5, "Derivative Financial Instruments," for details regarding the gross amounts, as well as the impact of our netting arrangements on our net derivative position. We only offset assets and liabilities in relation to our derivative financial instruments. |
New Accounting Requirements | ' |
New Accounting Requirements |
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In February 2013, the FASB issued guidance regarding the reporting of amounts reclassified out of accumulated other comprehensive income. The guidance is effective for interim and annual periods beginning after December 15, 2012. We adopted the guidance in the quarter ended March 31, 2013. Adoption of the new reporting guidance did not have a material impact on our financial position or results of operations. |
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In December 2011, the FASB issued guidance regarding the disclosure of offsetting assets and liabilities. The guidance requires disclosure of gross information and net information about instruments and transactions eligible for offset arrangement. The guidance is effective for interim and annual periods beginning on or after January 1, 2013. We adopted the guidance in the quarter ended March 31, 2013. Adoption of the additional disclosures regarding offsetting assets and liabilities did not have a material impact on our financial position or results of operations. |