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Sales and Other Operating Revenues | 9 Months Ended
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Sep. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenue from Contract with Customer [Text Block] | Note 21—Sales and Other Operating Revenues Transitional Arrangements We adopted the provisions of ASC Topic 606 beginning January 1, 2018, using the modified retrospective approach, which we have applied to contracts within the scope of the standard that had not been completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with ASC Topic 605. See N ote 2—Change s in Accounting Principles for the effect on our consolidated balance sheet and the line items which have been impacted by the adoption of this standard. The cumulative effect of applying the standard relates solely to certain lice nsing arrangements where revenue was previously recognized ($61 million in 2011, $146 million in 2015, and $44 million in 2017) based on contractual milestones. Under ASC Topic 606, such revenues are recognized when the customer has the ability to utilize and benefit from its right to use the license. As a result, such historically recognized revenues must be reversed through a cumulative effect adjustment and deferred until such time when the customer has the ability to utilize and benefit from the licens e. The cumulative effect adjustment relates to contracts that were not substantially completed at the date of implementation. Accounting Policy Revenues associated with the sales of crude oil, bitumen, natural gas, LNG, natural gas liquids and other items are recognized at the point in time when the customer obtains control of the asset. In evaluating when a customer has control of the asset, we primarily consider whether the transfer of legal title and physical delivery has occurred, whether the cus tomer has significant risks and rewards of ownership, and whether the customer has accepted delivery and a right to payment exists. These products are typically sol d at prevailing market prices. We allocate variable market-based consideration to deliveri es (performance obligations) in the current period as that consideration relates specifically to our efforts to transfer control of current period deliveries to the customer and represents the amount we expect to be entitled to in exchange for the related products. Payment is typically due within 30 days or less. Practical Expedients Typically, our commodity sales contracts are less than 12 months in duration; however, certain commodity sales contracts may carry a longer duration, which may extend to t he end of field life. We have long-term commodity sales contracts which use prevailing market prices at the time of delivery, and u nder these contracts, the market-based variable consideration for each performance obligation (i.e., delivery of commodity) is allocated to each wholly unsatisfied performance obligation within the contract. Accordingly, we have applied the practical expedient allowed in ASC Topic 606 and do not disclose the aggregate amount of the transaction price allocated to performance ob ligations or when we expect to recognize revenues that are unsatisfied (or partially unsatisfied) as of the end of the reporting period. Revenue from Contracts with Customers The following table provides further disaggregation of our consolidated sales and other operating revenues:
| Millions of Dollars |
| Three Months Ended |  | Nine Months Ended |
September 30 | September 30 |
| 2018 |  | 2017 | * | 2018 |  | 2017 | *
Revenue from contracts with customers | $ | 7,546 |  | 4,636 |  | 20,834 |  | 14,428 |
Revenue from contracts outside the scope of ASC Topic 606 |  |  |  |  |  |  |  |  |
Physical contracts meeting the definition of a derivative |  | 1,897 |  | 2,050 |  | 5,877 |  | 6,631 |
Financial derivative contracts |  | 6 |  | 2 |  | 40 |  | (72) |
Consolidated sales and other operating revenues | $ | 9,449 |  | 6,688 |  | 26,751 |  | 20,987 |
*Under the modified retrospective approach, prior period amounts have not been adjusted upon adoption of ASC Topic 606. |
Revenues from contracts outside the scope of ASC Topic 606 relate primarily to physical gas contracts at market prices which qualify as derivatives accounted for under ASC Topic 815, “Derivatives and Hedging,” and for which we have not elected NPNS. There is no significant difference in contractual terms or the policy for recognition of revenue from these contracts and those within the scope of ASC Topic 606. The following disaggregation of revenues is provided in conjunction with Note 21—Seg ment Disclosures and Related Information:
|  | Millions of Dollars |
|  | Three Months Ended |  | Nine Months Ended |
| September 30 | September 30 |
|  | 2018 |  | 2017 | * | 2018 |  | 2017 | *
Revenue from Outside the Scope of ASC Topic 606 |  |  |  |  |  |  |  |  |
| by Segment |  |  |  |  |  |  |  |  |
Lower 48 | $ | 1,534 |  | 1,563 |  | 4,547 |  | 4,834 |
Canada |  | 87 |  | 161 |  | 374 |  | 680 |
Europe and North Africa |  | 276 |  | 326 |  | 956 |  | 1,117 |
Physical contracts meeting the definition of a derivative | $ | 1,897 |  | 2,050 |  | 5,877 |  | 6,631 |
*Under the modified retrospective approach, prior period amounts have not been adjusted upon adoption of ASC Topic 606. |
|  | Millions of Dollars |
|  | Three Months Ended |  | Nine Months Ended |
| September 30 | September 30 |
|  | 2018 |  | 2017 | * | 2018 |  | 2017 | *
Revenue from Outside the Scope of ASC Topic 606 |  |  |  |  |  |  |  |  |
| by Product |  |  |  |  |  |  |  |  |
Crude oil | $ | 267 |  | 171 |  | 843 |  | 530 |
Natural gas |  | 1,522 |  | 1,811 |  | 4,775 |  | 5,870 |
Other |  | 108 |  | 68 |  | 259 |  | 231 |
Physical contracts meeting the definition of a derivative | $ | 1,897 |  | 2,050 |  | 5,877 |  | 6,631 |
*Under the modified retrospective approach, prior period amounts have not been adjusted upon adoption of ASC Topic 606. |
Receivables and Contract Liabilities Receivables from Contracts with Customers At September 30, 2018, the “Accounts and n otes receivable” line on our consolidated balance sheet included trade receivables of $3,129 million compared with $2,675 million at December 31, 2017, and included both contracts with customers within the scope of ASC Topic 606 and those that are outside the scope of ASC Topic 606. We typically receive payment within 30 days or less (depending on the terms of the invoice) once deliver y is made. Revenues that are outside the scope of ASC Topic 606 relate primarily to physical gas sales contracts at market prices for which we do not elect NPNS and are therefore accounted for as a derivative under ASC Topic 815. There is little distinct ion in the nature of the customer or credit quality of trade receivables associated with gas sold under contracts for which NPNS has not been elected compared with trade receivables where NP NS has been elected. Contract Liabilities from Contracts with Customers We have entered into contractual arrangements where we license proprietary technology to customers related to the optimization process for operating LNG plants. The agreements typically provide for negotiated payments to be made at stated milest ones. The payments are not directly related to our performance under the contract and are recorded as deferred revenue to be recognized as revenue when the customer can utilize and benefit from their right to use the license. Payments are received in ins tal l ments over the construction period.
| Millions of Dollars
Contract Liabilities |  |
At January 1, 2018 | $ | 251
Contractual payments received* |  | 81
Revenue recognized |  | (148)
At September 30, 2018 | $ | 184
Amounts Recognized in the Consolidated Balance Sheet at September 30, 2018 |  |
Current liabilities | $ | 147
Noncurrent liabilities |  | 37
| $ | 184
*Includes $14 million and $81 million for the three- and nine-month periods of 2018, respectively.
For the three- and nine-month periods of 2018, we recognized revenue of $73 million and $148 million, respectively, in the “Sales and other operating revenues” line on our consolidated income statement. We expect to recognize the contract liabilities as of September 30, 2018, as revenue between the remainder of 2018 and 2022 as construction is complete d. Prior to the adoption of ASC Topic 606, contractual cash payments received would have been recognized as “S ales and o ther o perating r evenues” when recei ved.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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