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Acquisitions and Dispositions | 9 Months Ended
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Sep. 30, 2022
Business Combination, Asset Acquisition And Dispositions [Abstract] |
Acquisitions and Dispositions | Note 3—Acquisitions and Dispositions Acquisition of Shell Enterprise LLC's (Shell) Permian Assets In December 2021, we completed our acquisition of Shell's assets in the Permian based Delaware Basin in an all-cash transaction for $8.6 billion after customary adjustments. Assets acquired include approximately 225,000 net acres and producing properties located entirely in Texas. The acquisition was accounted for as a business combination under FASB Topic ASC 805 using the acquisition method, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date as we identify new information about facts and circumstances that existed as of the acquisition date to consider. Oil and gas properties were valued using a discounted cash flow approach incorporating market participant and internally generated price assumptions, production profiles and operating and development cost assumptions. The fair values determined for accounts receivable, accounts payable and most other current assets and current liabilities were equivalent to the carrying value due to their short-term nature. The total consideration of $8.6 billion was allocated to the identifiable assets and liabilities based on their fair values at the acquisition date.
Assets Acquired | Millions of Dollars
Accounts receivable, net | $ | 337 |
Inventories | 20 |
Net properties, plants and equipment | 8,582 |
Other assets | 50 |
Total assets acquired | $ | 8,989 |
Liabilities Assumed |
Accounts payable | $ | 206 |
Accrued income and other taxes | 6 |
Other accruals | 20 |
Asset retirement obligations and accrued environmental costs | 86 |
Other liabilities and deferred credits | 36 |
Total liabilities assumed | $ | 354 |
Net assets acquired | $ | 8,635 |
With the completion of the Shell Permian transaction, we acquired proved and unproved properties of approximately $4.2 billion and $4.3 billion, respectively. Supplemental Pro Forma (unaudited) The following table summarizes the unaudited supplemental pro forma financial information for the three- and nine-month periods ended September 30, 2021, as if we had completed the acquisition of Shell's Permian assets on January 1, 2020:
| Millions of Dollars
| Three Months Ended September 30, 2021 |  | Nine Months Ended September 30, 2021
Supplemental Pro Forma (unaudited) | As Reported | Pro forma Shell | Pro forma Combined |  | As Reported | Pro forma Shell | Pro forma Combined
Total Revenues and Other Income | 11,616 |  | 882 |  | 12,498 |  |  | 32,386 |  | 2,277 |  | 34,663 |
Income before income taxes | 3,582 |  | 364 |  | 3,946 |  |  | 8,376 |  | 780 |  | 9,156 |
Net Income | 2,379 |  | 279 |  | 2,658 |  |  | 5,452 |  | 597 |  | 6,049 |
Earnings per share ($ per share): |  |  |  |  |  |  |
Basic net income | $ | 1.78 |  |  | 1.99 |  |  | 4.10 |  |  | 4.55 |
Diluted net income | 1.78 |  |  | 1.98 |  |  | 4.09 |  |  | 4.54 |
The unaudited supplemental pro forma financial information is presented for illustration and comparative purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been completed on January 1, 2020, nor is it necessarily indicative of future operating results of the combined entity. The unaudited pro forma financial information for the three- and nine-month periods ended September 30, 2021, is a result of combining the consolidated income statement of ConocoPhillips with the results of the assets acquired from Shell. The pro forma results do not include transaction-related costs, nor any cost savings anticipated as a result of the transaction. The pro forma results include adjustments made primarily to DD&A, which is based on the unit-of-production method, resulting from the purchase price allocated to properties, plants and equipment. We believe the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected. Acquisition of Concho Resources Inc. (Concho) In January 2021, we completed our acquisition of Concho, an independent oil and gas exploration and production company in an all-stock transaction. In conjunction with this acquisition, we commenced, and completed in 2021, a company-wide restructuring program, the scope of which included combining the operations of the two companies as well as other global restructuring activities for which we recognized non-recurring restructuring and transaction costs. Further information regarding the Concho acquisition can be found in the following footnotes: Note 7—Changes in Equity; Note 9—Contingencies and Commitments; Note 10—Derivative and Financial Instruments; and Note 13—Cash Flow Information and should be read in conjunction with the notes included in our Annual Report on Form 10-K. Acquisition of Additional Shareholding Interest in Australia Pacific LNG Pty Ltd (APLNG) In February 2022, we completed the acquisition of an additional 10 percent interest in APLNG from Origin Energy for approximately $1.4 billion, after customary adjustments, in an all-cash transaction resulting from the exercise of our preemption right. This increased our ownership in APLNG to 47.5 percent, with Origin Energy and Sinopec owning 27.5 percent and 25 percent, respectively. APLNG is reported as an equity investment in our Asia Pacific segment. Asset Acquisition In September 2022, we completed the acquisition of additional working interest in certain Eagle Ford acreage in the Lower 48 segment for cash consideration of $236 million after customary adjustments. This agreement was accounted for as an asset acquisition resulting in the recognition of $254 million of PP&E, $10 million of ARO and an $8 million net reduction in working capital. Assets Sold In September 2022, we sold our interest in certain noncore assets in the Anadarko basin of our Lower 48 segment for net proceeds of $210 million and recognized a $76 million before-tax and $58 million after-tax loss. At the time of disposition, our interest in these assets had a net carrying value of $286 million, consisting of $310 million of assets, primarily related to $303 million of PP&E, and $24 million of liabilities, primarily related to AROs. In April 2022, we sold our interests in certain noncore assets in the Permian basin of our Lower 48 segment for net proceeds of $370 million and recognized an $80 million before-tax and $63 million after-tax gain. At the time of disposition, our interests in these assets had a net carrying value of $290 million, consisting primarily of $401 million of PP&E and $111 million of liabilities, primarily related to AROs. In March 2022, we completed the divestiture of our subsidiaries that held our Indonesia assets and operations, and based on an effective date of January 1, 2021, we received net proceeds of $731 million after customary adjustments and recognized a $534 million before-tax and $462 million after-tax gain related to this transaction. Together, the subsidiaries sold indirectly held our 54 percent interest in the Indonesia Corridor Block Production Sharing Contract (PSC) and 35 percent shareholding in the Transasia Pipeline Company. At the time of the disposition, the net carrying value was approximately $0.2 billion, excluding $0.2 billion of cash and restricted cash. The net book value consisted primarily of $0.3 billion of PP&E and $0.1 billion of ARO. The before-tax earnings associated with the subsidiaries sold, excluding the gain on disposition noted above, were $138 million and $423 million for the nine-month period ended September 30, 2022 and 2021, respectively. Results of operations for the Indonesia interests sold were reported in our Asia Pacific segment. For the three- and nine-months ended September 30, 2022, we recorded contingent payments of $6 million and $430 million, respectively, relating to the previous dispositions of our interest in the Foster Creek Christina Lake Partnership and western Canada gas assets as well as our San Juan assets. The contingent payments are recorded as gain on dispositions in our consolidated income statement and are reflected within our Canada and Lower 48 segments. The term of contingent payments in our Canada segment ended in the second quarter of 2022. For the three- and nine-months ended September 30, 2021, we recorded contingent payments of $121 million and $222 million, respectively, relating to these dispositions.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
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