NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1
. Organization and Summary of Significant Accounting Policies
Organization and Principles of Consolidation
We are
an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids (NGLs). Our U.S. operations are onshore and focus primarily on large scale, liquids-rich resource plays in the Anadarko Basin of Oklahoma, the Williston Basin of North Dakota and the Uinta Basin of Utah. In addition, we have oil assets offshore China, and gas assets in the Arkoma Basin of Oklahoma.
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 joint 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.
These unaudited consolidated financial statements reflect, in the opinion of our management, all adjustments, consisting only of normal and recurring adjustments, necessary to fairly state our financial position as of, and results of operations, for the periods presented. These financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Interim period results are not necessarily indicative of results of operations or cash flows for a full year.
These consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
Risks and Uncertainties
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. Other risks and uncertainties that could affect us in a volatile commodity price environment include, but are not limited to, counterparty credit risk for our receivables, responsibility for decommissioning liabilities for offshore interests we no longer own, inability to access credit markets, regulatory risks and our ability to meet financial ratios and covenants in our financing agreements.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP 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 estimates are associated with the quantities of proved oil, natural gas and NGL reserves, the timing and amount of transfers of our unevaluated properties into our amortizable full cost pool, the recoverability of our deferred tax assets and the fair value of our derivative contracts.
Revenue Recognition
We adopted the accounting guidance issued by the FASB regarding revenues from contracts with customers on January 1, 2018. The adoption of the new guidance did not materially impact our existing policies governing the timing and amount of revenue recognition or the classification of revenues and associated expenses on our Consolidated Statement of Operations and Comprehensive Income.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
All of our oil, natural gas and NGLs are sold at market-based prices adjusted for location and quality differentials to a variety of purchasers. Our production is sold either at the lease or transported to markets further downstream. We record revenue when control of our production transfers to the customer and collectability is reasonably assured. Substantially all of our customers pay us within 30 days in accordance with industry standards for the sale of oil, natural gas and NGLs. For sales at the lease, control transfers immediately and we record revenue for the amount we expect to receive from the purchaser. For contracts in which control transfers to the customer downstream from the lease, expected revenues are presented on a gross basis with related expenses incurred prior to the transfer of control to the customer presented as transportation and processing expenses.
Restricted Cash
Restricted cash consists of amounts held in escrow accounts to satisfy future plug and abandonment obligations for our China operations. These amounts are restricted as to their current use and will be released as we plug and abandon wells and facilities in China.
Other Current Assets
Other current assets primarily consist of federal income tax refunds receivable, capital and lease operating expense prepayments and other prepaid items, including but not limited to, rent and insurance.
For the periods ended
September 30, 2018
and
December 31, 2017
federal income tax refunds receivable were
$38 million
and
$53 million
, respectively.
New Accounting Requirements
In November 2016, the FASB issued guidance regarding the classification and presentation of changes in restricted cash in the statement of cash flows. The guidance requires amounts described as restricted cash be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. We adopted this guidance in the first quarter of 2018 and retrospectively adjusted the prior period presented.
The following table summarizes the impact of the adoption of the new accounting standard to the Company’s Consolidated Statements of Cash Flows for the nine months ended September 30, 2017.
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As Originally Presented
|
|
Adoption Adjustments
|
|
As Adjusted
|
|
|
(In millions)
|
For the period ended September 30, 2017
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
640
|
|
|
$
|
11
|
|
|
$
|
651
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
(127
|
)
|
|
11
|
|
|
(116
|
)
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
555
|
|
|
25
|
|
|
580
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
428
|
|
|
$
|
36
|
|
|
$
|
464
|
|
In January 2016, the FASB issued guidance regarding several broad topics related to the recognition and measurement of financial assets and liabilities. The guidance is effective for interim and annual periods beginning after December 15, 2017 and did not have an impact on our financial statements.
In February 2016, the FASB issued guidance regarding the accounting for leases. The guidance requires recognition of certain leases on the balance sheet.
The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for interim and annual periods beginning after December 15, 2018.
We have established policies and procedures to capture relevant lease data and are currently evaluating our population of leases for compliance with the new accounting guidance. We have not concluded our lease review or the practical expedient elections available, and we continue to evaluate the impact of this guidance on our financial statements.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
In February 2018, the FASB issued guidance regarding the reclassification of certain tax effects from accumulated other comprehensive income. The guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The guidance is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We adopted this guidance in the first quarter of 2018, as permitted, with no material impact on our financial statements.
2
. Accounts Receivable
Accounts receivable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
Revenue
|
|
$
|
260
|
|
|
$
|
175
|
|
Joint interest
|
|
116
|
|
|
108
|
|
Other
|
|
26
|
|
|
25
|
|
Reserve for doubtful accounts
|
|
(16
|
)
|
|
(16
|
)
|
Total accounts receivable, net
|
|
$
|
386
|
|
|
$
|
292
|
|
3. Inventories
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. Inventories are carried at the lower of cost or net realizable value. At
September 30, 2018
, crude oil inventory totaled approximately
$5 million
. We had no crude oil inventory at
December 31, 2017
.
4
.
Derivative Financial Instruments
Commodity Derivative Instruments
We utilize derivative strategies that consist of either a single derivative instrument or a combination of instruments to manage the variability in cash flows associated with the forecasted sale of our future domestic oil, natural gas and NGL production. While the use of derivative instruments may limit or partially reduce the downside risk of adverse commodity price movements, their use also may limit future income from favorable commodity price movements. Our derivative strategies are outlined in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
Our oil and gas derivative contracts are settled based upon reported prices on the NYMEX, and our NGL derivative contracts are settled on posted prices at Mont Belvieu. The estimated fair value of these contracts is based upon various factors, including closing exchange prices on the NYMEX, Mont Belvieu over-the-counter quotations, estimated volatility, non-performance risk adjustments using rates of default and time to maturity. The calculation of the fair value of options requires the use of an option-pricing model. See Note
5
, "
Fair Value Measurements
."
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
At
September 30, 2018
, we had outstanding derivative positions as set forth in the tables below.
Crude Oil
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|
|
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|
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NYMEX Contract Price Per Bbl
|
|
|
|
|
|
|
|
|
|
|
Collars
|
|
Estimated Fair Value
Asset (Liability)
|
Period and Type of Instrument
|
|
Volume in MBbls
|
|
Swaps
(Weighted Average)
|
|
Puts
(Weighted Average)
|
|
Floors
(Weighted Average)
|
|
Ceilings
(Weighted Average)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
2,576
|
|
|
$
|
55.81
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
Fixed-price swaps with sold puts:
|
|
322
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
|
|
56.78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
Sold puts
|
|
|
|
—
|
|
|
44.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Collars with sold puts:
|
|
1,932
|
|
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
—
|
|
|
—
|
|
|
48.34
|
|
|
56.60
|
|
|
(32
|
)
|
Sold Puts
|
|
|
|
|
—
|
|
|
39.47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
90
|
|
|
69.33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Collars with sold puts:
|
|
10,841
|
|
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
—
|
|
|
—
|
|
|
50.96
|
|
|
57.56
|
|
|
(157
|
)
|
Sold puts
|
|
|
|
—
|
|
|
40.97
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
Total
|
|
$
|
(240
|
)
|
Natural Gas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
NYMEX Contract Price Per MMBtu
|
|
|
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|
|
|
|
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|
|
Collars
|
|
Estimated Fair Value Asset (Liability)
|
Period and Type of Instrument
|
|
Volume in MMMBtus
|
|
Swaps (Weighted Average)
|
|
Puts (Weighted Average)
|
|
Floors (Weighted Average)
|
|
Ceilings (Weighted Average)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
13,800
|
|
|
$
|
2.97
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Fixed-price swaps with sold puts:
|
|
6,120
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
|
|
3.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Sold puts
|
|
|
|
—
|
|
|
2.66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Collars
|
|
3,670
|
|
|
—
|
|
|
—
|
|
|
2.88
|
|
|
3.28
|
|
|
—
|
|
Collars with sold puts:
|
|
930
|
|
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
—
|
|
|
—
|
|
|
2.87
|
|
|
3.32
|
|
|
—
|
|
Sold puts
|
|
|
|
—
|
|
|
2.30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
3,650
|
|
|
2.91
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Collars
|
|
9,000
|
|
|
—
|
|
|
—
|
|
|
3.00
|
|
|
3.47
|
|
|
1
|
|
Total
|
|
$
|
—
|
|
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Natural Gas Liquids (Propane)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mont Belvieu Contract Price Per Gallon
|
|
|
Period and Type of Instrument
|
|
Volume in MBbls
|
|
Swaps
(Weighted Average)
|
|
Estimated Fair Value Asset (Liability)
|
|
|
|
|
|
|
(In millions)
|
2018:
|
|
|
|
|
|
|
|
|
|
Fixed-price swaps
|
|
690
|
|
|
$
|
0.91
|
|
|
$
|
(5
|
)
|
Total
|
|
$
|
(5
|
)
|
Additional Disclosures about Derivative Financial Instruments
We had derivative financial instruments recorded in our consolidated balance sheet as assets (liabilities) at their respective estimated fair value, as set forth below.
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
|
Gross Fair Value
|
|
Offset in Balance Sheet
|
|
Balance Sheet Location
|
|
Gross Fair Value
|
|
Offset in Balance Sheet
|
|
Balance Sheet Location
|
|
|
|
|
Current
|
|
Noncurrent
|
|
|
|
Current
|
|
Noncurrent
|
|
|
(In millions)
|
|
(In millions)
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil positions
|
|
$
|
30
|
|
|
$
|
(30
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(270
|
)
|
|
$
|
30
|
|
|
$
|
(216
|
)
|
|
$
|
(24
|
)
|
Natural gas positions
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
NGL positions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
Total
|
|
$
|
33
|
|
|
$
|
(33
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(278
|
)
|
|
$
|
33
|
|
|
$
|
(221
|
)
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil positions
|
|
$
|
48
|
|
|
$
|
(48
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(170
|
)
|
|
$
|
48
|
|
|
$
|
(96
|
)
|
|
$
|
(26
|
)
|
Natural gas positions
|
|
22
|
|
|
(6
|
)
|
|
15
|
|
|
1
|
|
|
(6
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
NGL positions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
Total
|
|
$
|
70
|
|
|
$
|
(54
|
)
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
(178
|
)
|
|
$
|
54
|
|
|
$
|
(98
|
)
|
|
$
|
(26
|
)
|
The amount of gain (loss) recognized in "Commodity derivative income (expense)" in our consolidated statement of operations and comprehensive income related to our derivative financial instruments follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
(In millions)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Realized gain (loss) on oil positions
|
|
$
|
(75
|
)
|
|
$
|
13
|
|
|
$
|
(183
|
)
|
|
$
|
58
|
|
Realized gain (loss) on natural gas positions
|
|
2
|
|
|
(2
|
)
|
|
12
|
|
|
(12
|
)
|
Realized gain (loss) on NGL positions
|
|
(4
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
Total realized gain (loss)
|
|
(77
|
)
|
|
11
|
|
|
(176
|
)
|
|
46
|
|
Unrealized gain (loss) on oil positions
|
|
23
|
|
|
(38
|
)
|
|
(118
|
)
|
|
(41
|
)
|
Unrealized gain (loss) on natural gas positions
|
|
(2
|
)
|
|
4
|
|
|
(16
|
)
|
|
53
|
|
Unrealized gain (loss) on NGL positions
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
Total unrealized gain (loss)
|
|
20
|
|
|
(34
|
)
|
|
(137
|
)
|
|
12
|
|
Total
|
|
$
|
(57
|
)
|
|
$
|
(23
|
)
|
|
$
|
(313
|
)
|
|
$
|
58
|
|
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
The use of derivative transactions involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. Our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty, and we have netting arrangements with all of our counterparties that provide for offsetting payables against receivables by counterparty. At
September 30, 2018
,
10
of our
16
counterparties accounted for approximately
81%
of our contracted volumes, with the largest counterparty accounting for approximately
11%
.
At
September 30, 2018
, approximately
77%
of our volumes subject to derivative instruments are with lenders under our credit facility. Our credit facility, senior 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.
5
.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The authoritative guidance requires disclosure of the framework for measuring fair value and requires that fair value measurements be classified and disclosed in one of the following categories:
|
|
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
Level 2:
|
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that we value using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter commodity fixed-price swaps and, as of September 30, 2017, commodity options (i.e., price collars, sold puts, purchased calls or swaptions).
|
We use a modified Black-Scholes option pricing valuation model for option and swaption derivative contracts that considers various inputs including: (a) forward prices for commodities, (b) time value, (c) volatility factors, (d) counterparty credit risk and (e) current market and contractual prices for the underlying instruments.
|
|
Level 3:
|
Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity).
|
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy.
The determination of the fair values of our derivative contracts incorporates various factors, which include not only the impact of our non-performance risk on our liabilities but also the credit standing of the counterparties involved. We utilize counterparty rate of default values to assess the impact of non-performance risk when evaluating both our liabilities to, and receivables from, counterparties.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Recurring Fair Value Measurements
The following table summarizes the valuation of our assets and liabilities that are measured at fair value on a recurring basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Classification
|
|
|
|
|
Quoted Prices in Active Markets for Identical Assets or (Liabilities) (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Total
|
|
|
(In millions)
|
As of September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund investments
|
|
$
|
186
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
186
|
|
Deferred compensation plan assets
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Equity securities available-for-sale
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
Oil, gas and NGL derivative contracts
|
|
—
|
|
|
(245
|
)
|
|
—
|
|
|
(245
|
)
|
Stock-based compensation liability awards
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
Total
|
|
$
|
201
|
|
|
$
|
(245
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
Money market fund investments
|
|
$
|
162
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
162
|
|
Deferred compensation plan assets
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
Equity securities available-for-sale
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
Oil, gas and NGL derivative contracts
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
|
(108
|
)
|
Stock-based compensation liability awards
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
Total
|
|
$
|
174
|
|
|
$
|
(108
|
)
|
|
$
|
—
|
|
|
$
|
66
|
|
Level 3 Fair Value Measurements
The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the indicated periods.
|
|
|
|
|
|
|
|
Derivatives
|
|
|
(In millions)
|
Balance at January 1, 2017
|
|
$
|
(75
|
)
|
Unrealized gains (losses) included in earnings
|
|
(17
|
)
|
Purchases, issuances, sales and settlements:
|
|
|
|
Settlements
|
|
30
|
|
Transfers into Level 3
|
|
—
|
|
Transfers out of Level 3
|
|
62
|
|
Balance at September 30, 2017
|
|
$
|
—
|
|
Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at September 30, 2017
|
|
$
|
—
|
|
During the third quarter of 2017, we transferred
$62 million
of derivative option contracts out of the Level 3 into Level 2 hierarchy as a result of our ability to derive volatility inputs from directly observable sources. Therefore, we have no financial assets and liabilities classified as Level 3 as of the balance sheet dates presented.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Fair Value of Debt
The estimated fair value of our notes, based on quoted prices in active markets (Level 1) as of the indicated dates, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
5¾% Senior Notes due 2022
|
|
$
|
787
|
|
|
$
|
802
|
|
5⅝% Senior Notes due 2024
|
|
1,051
|
|
|
1,089
|
|
5⅜% Senior Notes due 2026
|
|
726
|
|
|
739
|
|
6
. Oil and Gas Properties
Oil and gas properties consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
Proved
|
|
$
|
24,340
|
|
|
$
|
23,272
|
|
Unproved
|
|
1,264
|
|
|
1,200
|
|
Gross oil and gas properties
|
|
25,604
|
|
|
24,472
|
|
Accumulated depreciation, depletion and amortization
|
|
(10,461
|
)
|
|
(10,032
|
)
|
Accumulated impairment
|
|
(10,509
|
)
|
|
(10,509
|
)
|
Net oil and gas properties
|
|
$
|
4,634
|
|
|
$
|
3,931
|
|
We capitalized approximately
$30 million
and
$33 million
of interest and direct internal costs during the
three months ended September 30, 2018
and
2017
, respectively, and
$86 million
and
$97 million
during the
nine months ended September 30, 2018
and
2017
, respectively.
Costs withheld from amortization as of
September 30, 2018
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs Incurred In
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015 & Prior
|
|
Total
|
|
|
(In millions)
|
|
|
Acquisition costs
|
|
$
|
29
|
|
|
$
|
107
|
|
|
$
|
483
|
|
|
$
|
300
|
|
|
$
|
919
|
|
Exploration costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Capitalized internal cost
|
|
13
|
|
|
38
|
|
|
49
|
|
|
46
|
|
|
146
|
|
Capitalized interest
|
|
45
|
|
|
61
|
|
|
51
|
|
|
42
|
|
|
199
|
|
Total costs withheld from amortization
|
|
$
|
87
|
|
|
$
|
206
|
|
|
$
|
583
|
|
|
$
|
388
|
|
|
$
|
1,264
|
|
We performed our test for ceiling test impairment in accordance with SEC guidelines and no ceiling test impairment was required at
September 30, 2018
. Future declines in SEC pricing or downward revisions to our estimated proved reserves could result in additional ceiling test impairments of our oil and gas properties in subsequent periods.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
7
. Other Property and Equipment
Other property and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
Furniture, fixtures and equipment
|
|
$
|
172
|
|
|
$
|
165
|
|
Gathering systems and equipment
|
|
118
|
|
|
115
|
|
Accumulated depreciation and amortization
|
|
(118
|
)
|
|
(112
|
)
|
Net other property and equipment
|
|
$
|
172
|
|
|
$
|
168
|
|
8
.
Income Taxes
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (Tax Reform), which made significant changes to the U.S. federal income tax laws affecting the Company. Major changes in this legislation applicable to the Company relate to the reduction in tax rate for corporations to
21%
, the repeal of the corporate alternative minimum tax, interest deductibility and net operating loss carryforward limitations, changes to certain executive compensation and full expensing provisions related to business assets. The Company included tax reform impacts in the fourth quarter 2017 financial statements and continues to examine the impact of this legislation and future regulations. The third quarter 2018 tax accrual calculated under the estimated annual effective tax rate method reflects the law changes that were effective January 1, 2018, including the new corporate tax rate of
21%
.
Our effective tax rate differs from the U.S. statutory rate primarily due to domestic and international deferred tax asset valuation allowances and state income taxes as discussed below. The table below represents a reconciliation of the U.S. statutory income tax rate to our effective income tax rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
U.S. statutory income tax rate
|
|
21
|
%
|
|
35
|
%
|
|
21
|
%
|
|
35
|
%
|
State and local income taxes, net of federal effect
|
|
5.1
|
|
|
9.5
|
|
|
6.5
|
|
|
5.7
|
|
Valuation allowance, domestic
|
|
(22.0
|
)
|
|
(73.6
|
)
|
|
(21.4
|
)
|
|
(44.1
|
)
|
Valuation allowance, international
|
|
(1.1
|
)
|
|
(3.8
|
)
|
|
(1.2
|
)
|
|
(0.4
|
)
|
Foreign tax on foreign earnings
|
|
0.8
|
|
|
0.2
|
|
|
2.5
|
|
|
2.2
|
|
Provision to return - Oklahoma
|
|
(7.2
|
)
|
|
—
|
|
|
(3.5
|
)
|
|
—
|
|
Other
|
|
1.0
|
|
|
3.4
|
|
|
0.9
|
|
|
0.6
|
|
Effective income tax rate
|
|
(2.4
|
)%
|
|
(29.3
|
)%
|
|
4.8
|
%
|
|
(1.0
|
)%
|
Due to the ceiling test impairments of our oil and gas properties in 2015, we moved from a deferred tax liability position to a deferred tax asset position in most taxing jurisdictions. We have recorded a full valuation allowance against these deferred tax assets.
The effective tax rates for the
three months
ended
September 30, 2018
and
2017
were
(2.4)%
and
(29.3)%
, respectively. Our effective tax rate for the three months ended September 30, 2018 was primarily impacted by a
$16 million
deferred tax benefit related to an Oklahoma provision to return adjustment. Our effective tax rate for the three months ended 2017 was primarily impacted by a
$17 million
deferred tax benefit related to the carryback of net operating losses.
The effective tax rates for the
nine months
ended
September 30, 2018
and
2017
were
4.8%
and
(1.0)%
, respectively. Our effective tax rate for the
nine months
ended September 30, 2018 was primarily impacted by a
$16 million
deferred tax benefit related to an Oklahoma provision to return adjustment. Our effective tax rate for the nine months ended 2017 was primarily impacted by a
$17 million
deferred tax benefit related to the carryback of net operating losses.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
As of
September 30, 2018
, we did not have a liability for uncertain tax positions, and as such, we did not accrue related interest or penalties. The tax years 2015 through 2017 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject.
9
. Accrued Liabilities
Accrued liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
Revenue payable
|
|
$
|
334
|
|
|
$
|
239
|
|
Accrued capital costs
|
|
188
|
|
|
173
|
|
Accrued lease operating expenses
|
|
34
|
|
|
22
|
|
Employee incentive expense
|
|
31
|
|
|
44
|
|
Accrued interest on debt
|
|
33
|
|
|
67
|
|
Income and other taxes payable
|
|
26
|
|
|
11
|
|
Other
|
|
54
|
|
|
35
|
|
Total accrued liabilities
|
|
$
|
700
|
|
|
$
|
591
|
|
10
.
Debt
Our debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
Senior unsecured debt:
|
|
|
|
|
5¾% Senior Notes due 2022
|
|
$
|
750
|
|
|
$
|
750
|
|
5⅝% Senior Notes due 2024
|
|
1,000
|
|
|
1,000
|
|
5⅜% Senior Notes due 2026
|
|
700
|
|
|
700
|
|
Total senior unsecured debt
|
|
2,450
|
|
|
2,450
|
|
Debt issuance costs
|
|
(14
|
)
|
|
(16
|
)
|
Total long-term debt
|
|
$
|
2,436
|
|
|
$
|
2,434
|
|
Credit Arrangements
As of September 30, 2018, we had
no
borrowings under our money market lines of credit or revolving credit facility and had
no
letters of credit outstanding. On March 23, 2018, we amended our Credit Agreement. This amendment extended the maturity date of the revolving credit facility from
June 25, 2020
to
May 1, 2023
and increased the borrowing capacity from
$1.8 billion
to
$2.0 billion
. We incurred
$8 million
of deferred financing costs related to this amendment, which will be amortized over the term of the agreement. As of September 30, 2018, the largest individual loan commitment by any lender was approximately
9%
of total commitments.
Subject to compliance with certain restrictive covenants in our credit facility, our available borrowing capacity (before any amounts drawn) under our money market lines of credit with various institutions, the availability of which is at the discretion of those financial institutions, was
$125 million
at September 30, 2018.
Loans under the credit facility bear interest, at our option, equal to (a) the Alternate Base Rate (as defined in the Credit Agreement), plus a margin that is based on a grid of our debt rating (100 basis points per annum at September 30, 2018) or (b) the Adjusted Eurodollar Rate (as defined in the Credit Agreement), plus a margin that is based on a grid of our debt rating (200 basis points per annum at September 30, 2018).
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Under our credit facility, we pay commitment fees on available but undrawn amounts based on a grid of our debt rating (37.5 basis points per annum at September 30, 2018). We incurred aggregate commitment fees under our credit facility of approximately
$2 million
and
$6 million
for the
three and nine
-month periods ended September 30, 2018, respectively, which were recorded in “Interest expense” on our consolidated statement of operations and comprehensive income. For the three and nine-month periods ended September 30, 2017, we incurred commitment fees under our credit facility of approximately
$2 million
and
$5 million
, respectively.
Our credit facility has restrictive financial covenants that include the maintenance of a ratio of total debt to book capitalization not to exceed
0.6
to 1.0 and the maintenance of a ratio of earnings before gain or loss on the disposition of assets, interest expense, income taxes and certain non-cash items (such as depreciation, depletion and amortization expense, unrealized gains and losses on commodity derivatives and ceiling test impairments) to interest expense of at least
2.5
to 1.0. At September 30, 2018, we were
in compliance
with all of our debt covenants.
Letters of credit are subject to a fronting fee of 20 basis points per annum and annual fees based on a grid of our debt rating (200 basis points at September 30, 2018).
The credit facility includes events of default relating to customary matters, subject to customary grace and cure periods including, among other things, nonpayment of principal, interest or other amounts; violation of covenants; inaccuracy of representations and warranties in any material respect when made; a change of control; or certain other material adverse changes in our business. Our senior notes also contain standard events of default. If any of the foregoing defaults were to occur, our lenders under the credit facility could terminate future lending commitments, and our lenders under both the credit facility and our notes could declare the outstanding borrowings due and payable. In addition, our credit facility, senior notes and substantially all of our derivative arrangements contain provisions that provide for cross defaults and acceleration of those debt and derivative instruments in certain situations.
11
.
Commitments and Contingencies
We have various commitments for firm transportation, operating lease agreements for office space and other agreements. For further information, see Note 12, "Commitments and Contingencies," in our Annual Report on Form 10-K for the year ended
December 31, 2017
. There have been no material changes to the commitments disclosed at year-end 2017.
On October 19, 2017, we received notice of a request for arbitration from Sapura Energy Berhad, formerly known as SapuraKencana Petroleum Berhad, and Sapura Exploration and Production Inc., formerly known as SapuraKencana Energy Inc. (collectively, Sapura), the purchaser of our Malaysian business in February 2014. Sapura alleges that the Company owes approximately
$81 million
in damages for breach of contract, and further alleges, in the alternative, that Newfield owes approximately
$30 million
for a tax indemnity, plus interest and legal and other costs. We filed our response to the request for arbitration in December 2017 and have filed our statement of defense and cross-claim and other filings in the first half of 2018. We continue to be committed to fully contesting the claims and intend to vigorously defend the Company's interest.
We have been named as a defendant in a number of lawsuits and are involved in various other disputes, all arising in the ordinary course of our business, such as (a) claims from royalty owners for disputed royalty payments, (b) commercial disputes, (c) personal injury claims and (d) property damage claims. Although the outcome of these lawsuits and disputes cannot be predicted with certainty, we do not expect these matters to have a material adverse effect on our financial position, cash flows or results of operations.
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
12. Earnings Per Share
The following is the calculation of basic and diluted weighted-average shares outstanding and earnings per share (EPS) for the indicated periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
Net income (loss)
|
|
$
|
224
|
|
|
$
|
87
|
|
|
$
|
429
|
|
|
$
|
332
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares (denominator):
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares — basic
|
|
200
|
|
|
199
|
|
|
200
|
|
|
199
|
|
Dilution effect of stock options and unvested restricted stock and restricted stock units outstanding at end of period
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Weighted-average shares — diluted
|
|
201
|
|
|
200
|
|
|
201
|
|
|
200
|
|
Excluded due to anti-dilutive effect
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.12
|
|
|
$
|
0.44
|
|
|
$
|
2.15
|
|
|
$
|
1.67
|
|
Diluted
|
|
$
|
1.11
|
|
|
$
|
0.44
|
|
|
$
|
2.14
|
|
|
$
|
1.66
|
|
13
. Stock-Based Compensation
Our stock-based compensation expense consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
Equity awards
|
|
$
|
14
|
|
|
$
|
13
|
|
|
$
|
41
|
|
|
$
|
42
|
|
Liability awards — cash-settled restricted stock units
|
|
—
|
|
|
1
|
|
|
4
|
|
|
3
|
|
Total stock-based compensation
|
|
14
|
|
|
14
|
|
|
45
|
|
|
45
|
|
Capitalized in oil and gas properties
|
|
(2
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
(14
|
)
|
Net stock-based compensation expense
|
|
$
|
12
|
|
|
$
|
10
|
|
|
$
|
39
|
|
|
$
|
31
|
|
As of
September 30, 2018
, we had approximately
$54 million
of total unrecognized stock-based compensation expense related to unvested stock-based compensation awards that vest within
four years
. On
September 30, 2018
, the last reported sales price of our common stock on the New York Stock Exchange was
$28.83
per share.
During the first quarter of
2017
, we changed our qualified retirement requirements for existing market-based restricted stock units and all subsequently issued equity and liability awards. An employee becomes eligible for qualified retirement based on a combination of years of service and age. Under the revised requirements, qualified retirement allows an employee to continue vesting between
50%
and
100%
of awards with no additional service requirement beyond a six-month notification period. This change resulted in the accelerated recognition of stock-based compensation expense for unvested market-based restricted stock units previously issued.
Equity Awards
Equity awards consist of service-based and market-based restricted stock and restricted stock units, stock options and stock purchase options under the Employee Stock Purchase Plan (ESPP). In May 2017, Newfield adopted the 2017 Omnibus Incentive Plan, as amended (2017 Plan), which replaced the 2011 Omnibus Stock Plan as the vehicle for granting equity-based compensation awards. At
September 30, 2018
, we had approximately (1)
7.4 million
shares available for issuance under our
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
2017 Plan if all future awards are stock options, or (2)
4.5 million
shares available for issuance under our 2017 Plan if all future awards are restricted stock or restricted stock units.
Restricted Stock and Restricted Stock Units.
The following table summarizes the activity for our restricted stock and restricted stock units.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service-Based
Shares
|
|
Weighted- Average Grant Date Fair Value per Share
|
|
Market-Based
Shares
|
|
Weighted- Average Grant Date Fair Value per Share
|
|
Total
Shares
|
|
|
(In thousands, except per share data)
|
Non-vested shares outstanding at January 1, 2018
|
|
2,033
|
|
|
$
|
32.41
|
|
|
741
|
|
|
$
|
38.12
|
|
|
2,774
|
|
Granted
|
|
1,200
|
|
|
26.34
|
|
|
464
|
|
(1)
|
30.89
|
|
|
1,664
|
|
Forfeited
|
|
(104
|
)
|
|
32.05
|
|
|
(31
|
)
|
|
35.85
|
|
|
(135
|
)
|
Vested
|
|
(881
|
)
|
|
32.31
|
|
|
—
|
|
|
—
|
|
|
(881
|
)
|
Non-vested shares outstanding at September 30, 2018
|
|
2,248
|
|
|
$
|
29.22
|
|
|
1,174
|
|
|
$
|
35.32
|
|
|
3,422
|
|
________
|
|
(1)
|
In February 2018, we granted approximately
464,000
restricted stock units, which based on achievement of certain criteria, could vest within a range of
0%
to
200%
of shares granted upon completion of the period ending December 31, 2020.
|
Employee Stock Purchase Plan.
During the first six months of
2018
, options to purchase approximately
55,000
shares of our common stock were issued under our ESPP. The fair value of each option at the grant date was
$8.27
per share and was determined using the Black-Scholes option valuation method assuming no dividends, a risk-free interest rate of
1.53%
, an expected life of
six months
and weighted-average volatility of
38.6%
.
On July 1, 2018, options to purchase approximately
75,000
shares of our common stock were granted under our ESPP. The fair value of each option was
$8.35
per share as determined using the Black-Scholes option valuation method assuming no dividends, a risk-free interest rate of
2.11%
, an expected life of
six months
and weighted-average volatility of
42.7%
.
Stock Options.
As of
September 30, 2018
, we had no
stock options outstanding and exercisable. All outstanding stock options expired in January 2018. No stock options have been granted since 2008, except for ESPP options as discussed above.
Liability Awards
Liability awards consist of service-based awards that are settled in cash instead of shares, as discussed below.
Cash-Settled Restricted Stock Units.
The value of the cash-settled restricted stock units, and the associated stock-based compensation expense, is based on the Company's stock price at the end of each period. As of
September 30, 2018
, we had a liability of
$6 million
related to these
awards. The following table provides information about cash-settled restricted stock unit activity.
|
|
|
|
|
|
|
Cash-Settled Restricted Stock Units
|
|
|
(In thousands)
|
Non-vested units outstanding at January 1, 2018
|
|
351
|
|
Granted
|
|
186
|
|
Forfeited
|
|
(21
|
)
|
Vested
|
|
(217
|
)
|
Non-vested units outstanding at September 30, 2018
|
|
299
|
|
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
While we only have operations in the oil and gas exploration and production industry, we are organizationally structured along geographic operating segments. Our current operating segments are the United States and China. The accounting policies of our operating segments are the same as those described in Note 1, "Organization and Summary of Significant Accounting Policies," in our Annual Report on Form 10-K for the year ended
December 31, 2017
.
The following tables provide the geographic operating segment information for the three and
nine-month periods ended
September 30, 2018
and
2017
. Income tax allocations have been determined based on statutory rates in the applicable geographic segment. Our income tax allocation for our China operations is based on the combined statutory rates for China and the United States.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
China
|
|
Total
|
|
|
(In millions)
|
Three Months Ended September 30, 2018:
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Oil
|
|
$
|
452
|
|
|
$
|
18
|
|
|
$
|
470
|
|
Gas
|
|
99
|
|
|
—
|
|
|
99
|
|
NGL
|
|
140
|
|
|
—
|
|
|
140
|
|
Oil, gas and NGL revenues
|
|
691
|
|
|
18
|
|
|
709
|
|
|
|
|
|
|
|
|
Lease operating
|
|
60
|
|
|
6
|
|
|
66
|
|
Transportation and processing
|
|
92
|
|
|
—
|
|
|
92
|
|
Production and other taxes
|
|
38
|
|
|
1
|
|
|
39
|
|
Depreciation, depletion and amortization
|
|
160
|
|
|
3
|
|
|
163
|
|
Results of operations for oil and gas producing activities before tax
|
|
341
|
|
|
8
|
|
|
349
|
|
|
|
|
|
|
|
|
Other revenues
|
|
2
|
|
|
—
|
|
|
2
|
|
General and administrative
|
|
53
|
|
|
1
|
|
|
54
|
|
Other expense (income)
|
|
2
|
|
|
—
|
|
|
2
|
|
Allocated income tax (benefit)
(1)
|
|
73
|
|
|
2
|
|
|
|
Net income (loss) from oil and gas properties
|
|
$
|
215
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
$
|
711
|
|
Total operating expenses
|
|
|
|
|
|
416
|
|
Income (loss) from operations
|
|
|
|
|
|
295
|
|
Interest expense, net of interest income, capitalized interest and other
|
|
|
|
|
|
(20
|
)
|
Commodity derivative income (expense)
|
|
|
|
|
|
(57
|
)
|
Income (loss) from operations before income taxes
|
|
|
|
|
|
$
|
218
|
|
Total assets
|
|
$
|
5,603
|
|
|
$
|
73
|
|
|
$
|
5,676
|
|
Additions to long-lived assets
|
|
$
|
375
|
|
|
$
|
—
|
|
|
$
|
375
|
|
_________________
|
|
(1)
|
Allocated income tax based on estimated combined federal and state statutory tax rates in effect during the period, comprised of
25.5%
for domestic and
46%
for China.
|
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
China
|
|
Total
|
|
|
(In millions)
|
Three Months Ended September 30, 2017:
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Oil
|
|
$
|
265
|
|
|
$
|
11
|
|
|
$
|
276
|
|
Gas
|
|
78
|
|
|
—
|
|
|
78
|
|
NGL
|
|
85
|
|
|
—
|
|
|
85
|
|
Oil, gas and NGL revenues
|
|
428
|
|
|
11
|
|
|
439
|
|
|
|
|
|
|
|
|
Lease operating
|
|
49
|
|
|
4
|
|
|
53
|
|
Transportation and processing
|
|
80
|
|
|
—
|
|
|
80
|
|
Production and other taxes
|
|
16
|
|
|
—
|
|
|
16
|
|
Depreciation, depletion and amortization
|
|
120
|
|
|
4
|
|
|
124
|
|
Results of operations for oil and gas producing activities before tax
|
|
163
|
|
|
3
|
|
|
166
|
|
|
|
|
|
|
|
|
Other revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
General and administrative
|
|
51
|
|
|
2
|
|
|
53
|
|
Other expense (income)
|
|
1
|
|
|
—
|
|
|
1
|
|
Allocated income tax (benefit)
(1)
|
|
42
|
|
|
—
|
|
|
|
Net income (loss) from oil and gas properties
|
|
$
|
69
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
$
|
439
|
|
Total operating expenses
|
|
|
|
|
|
327
|
|
Income (loss) from operations
|
|
|
|
|
|
112
|
|
Interest expense, net of interest income, capitalized interest and other
|
|
|
|
|
|
(21
|
)
|
Commodity derivative income (expense)
|
|
|
|
|
|
(23
|
)
|
Income (loss) from operations before income taxes
|
|
|
|
|
|
$
|
68
|
|
Total assets
|
|
$
|
4,658
|
|
|
$
|
86
|
|
|
$
|
4,744
|
|
Additions to long-lived assets
|
|
$
|
332
|
|
|
$
|
—
|
|
|
$
|
332
|
|
_________________
|
|
(1)
|
Allocated income tax based on estimated combined federal and state statutory tax rates in effect during the period, comprised of
37%
for domestic and
60%
for China.
|
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
China
|
|
Total
|
|
|
(In millions)
|
Nine Months Ended September 30, 2018:
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Oil
|
|
$
|
1,249
|
|
|
$
|
93
|
|
|
$
|
1,342
|
|
Gas
|
|
282
|
|
|
—
|
|
|
282
|
|
NGL
|
|
341
|
|
|
—
|
|
|
341
|
|
Oil, gas and NGL revenues
|
|
1,872
|
|
|
93
|
|
|
1,965
|
|
|
|
|
|
|
|
|
Lease operating
|
|
174
|
|
|
23
|
|
|
197
|
|
Transportation and processing
|
|
253
|
|
|
—
|
|
|
253
|
|
Production and other taxes
|
|
88
|
|
|
2
|
|
|
90
|
|
Depreciation, depletion and amortization
|
|
429
|
|
|
18
|
|
|
447
|
|
Results of operations for oil and gas producing activities before tax
|
|
928
|
|
|
50
|
|
|
978
|
|
|
|
|
|
|
|
|
Other revenues
|
|
5
|
|
|
—
|
|
|
5
|
|
General and administrative
|
|
155
|
|
|
4
|
|
|
159
|
|
Other expense (income)
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
Allocated income tax (benefit)
(1)
|
|
199
|
|
|
21
|
|
|
|
Net income (loss) from oil and gas properties
|
|
$
|
582
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
$
|
1,970
|
|
Total operating expenses
|
|
|
|
|
|
1,143
|
|
Income (loss) from operations
|
|
|
|
|
|
827
|
|
Interest expense, net of interest income, capitalized interest and other
|
|
|
|
|
|
(64
|
)
|
Commodity derivative income (expense)
|
|
|
|
|
|
(313
|
)
|
Income (loss) from operations before income taxes
|
|
|
|
|
|
$
|
450
|
|
Total assets
|
|
$
|
5,603
|
|
|
$
|
73
|
|
|
$
|
5,676
|
|
Additions to long-lived assets
|
|
$
|
1,164
|
|
|
$
|
—
|
|
|
$
|
1,164
|
|
_________________
|
|
(1)
|
Allocated income tax based on estimated combined federal and state statutory tax rates in effect during the period, comprised of
25.5%
for domestic and
46%
for China.
|
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
China
|
|
Total
|
|
|
(In millions)
|
Nine Months Ended September 30, 2017:
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
Oil
|
|
$
|
712
|
|
|
$
|
86
|
|
|
$
|
798
|
|
Gas
|
|
247
|
|
|
—
|
|
|
247
|
|
NGL
|
|
212
|
|
|
—
|
|
|
212
|
|
Oil, gas and NGL revenues
|
|
1,171
|
|
|
86
|
|
|
1,257
|
|
|
|
|
|
|
|
|
Lease operating
|
|
142
|
|
|
25
|
|
|
167
|
|
Transportation and processing
|
|
223
|
|
|
—
|
|
|
223
|
|
Production and other taxes
|
|
43
|
|
|
—
|
|
|
43
|
|
Depreciation, depletion and amortization
|
|
316
|
|
|
24
|
|
|
340
|
|
Results of operations for oil and gas producing activities before tax
|
|
447
|
|
|
37
|
|
|
484
|
|
|
|
|
|
|
|
|
Other revenues
|
|
1
|
|
|
—
|
|
|
1
|
|
General and administrative
|
|
146
|
|
|
5
|
|
|
151
|
|
Other expense (income)
|
|
2
|
|
|
—
|
|
|
2
|
|
Allocated income tax (benefit)
(1)
|
|
111
|
|
|
19
|
|
|
|
Net income (loss) from oil and gas properties
|
|
$
|
189
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
$
|
1,258
|
|
Total operating expenses
|
|
|
|
|
|
926
|
|
Income (loss) from operations
|
|
|
|
|
|
332
|
|
Interest expense, net of interest income, capitalized interest and other
|
|
|
|
|
|
(61
|
)
|
Commodity derivative income (expense)
|
|
|
|
|
|
58
|
|
Income (loss) from operations before income taxes
|
|
|
|
|
|
$
|
329
|
|
Total assets
|
|
$
|
4,658
|
|
|
$
|
86
|
|
|
$
|
4,744
|
|
Additions to long-lived assets
|
|
$
|
853
|
|
|
$
|
—
|
|
|
$
|
853
|
|
_________________
|
|
(1)
|
Allocated income tax based on estimated combined federal and state statutory tax rates in effect during the period, comprised of
37%
for domestic and
60%
for China.
|
15
. Supplemental Cash Flow Information
The following table presents information about investing and financing activities that affect recognized assets and liabilities but do not result in cash receipts or payments for the indicated periods.
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
(In millions)
|
Non-cash investing and financing activities excluded from the statement of cash flows:
|
|
|
|
|
(Increase) decrease in accrued capital expenditures
|
|
$
|
(15
|
)
|
|
$
|
(86
|
)
|
(Increase) decrease in asset retirement costs
|
|
(1
|
)
|
|
2
|
|