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FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended
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Dec. 31, 2017
Financial Instruments [Abstract] |
Schedule of financial assets | The carrying amounts of the Company’s financial instruments by category were as follows:
|  | 2017
Asset (liability) |  | Financial assets at amortized cost |  |  | Fair value through profit or loss |  |  | Derivatives used for hedging |  |  | Financial liabilities at amortized cost |  |  | Total |
Accounts receivable |  | $ | 2,397 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,397 |
Investments |  | — |  |  | 893 |  |  | — |  |  | — |  |  | 893 |
Other long-term assets |  | 510 |  |  | — |  |  | 204 |  |  | — |  |  | 714 |
Accounts payable |  | — |  |  | — |  |  | — |  |  | (775 | ) |  | (775 | )
Accrued liabilities |  | — |  |  | — |  |  | — |  |  | (2,597 | ) |  | (2,597 | )
Other long-term liabilities (1) |  | — |  |  | (38 | ) |  | (65 | ) |  | (469 | ) |  | (572 | )
Long-term debt (2) |  | — |  |  | — |  |  | — |  |  | (22,458 | ) |  | (22,458 | )
|  | $ | 2,907 |  |  | $ | 855 |  |  | $ | 139 |  |  | $ | (26,299 | ) |  | $ | (22,398 | )
|  | 2016
Asset (liability) |  | Financial assets at amortized cost |  |  | Fair value through profit or loss |  |  | Derivatives used for hedging |  |  | Financial liabilities at amortized cost |  |  | Total |
Accounts receivable |  | $ | 1,434 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,434 |
Investments |  | — |  |  | 913 |  |  | — |  |  | — |  |  | 913 |
Other long-term assets |  | 385 |  |  | 4 |  |  | 485 |  |  | — |  |  | 874 |
Accounts payable |  | — |  |  | — |  |  | — |  |  | (595 | ) |  | (595 | )
Accrued liabilities |  | — |  |  | — |  |  | — |  |  | (2,222 | ) |  | (2,222 | )
Long-term debt (2) |  | — |  |  | — |  |  | — |  |  | (16,805 | ) |  | (16,805 | )
|  | $ | 1,819 |  |  | $ | 917 |  |  | $ | 485 |  |  | $ | (19,622 | ) |  | $ | (16,401 | )
(1) | Includes $469 million (US$375 million) of deferred purchase consideration payable to Marathon in March 2018.
(2) | Includes the current portion of long-term debt.
The fair values of the Company’s investments, recurring other long-term assets (liabilities) and fixed rate long-term debt are outlined below:
|  |  | 2017
|  | Carrying amount |  |  | Fair value
Asset (liability) (1) (2) |  |  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Investments (3) |  |  | $ | 893 |  |  | $ | 893 |  |  | $ | — |  |  | $ | — |
Other long-term assets (4) |  |  | $ | 714 |  |  | $ | — |  |  | $ | 204 |  |  | $ | 510 |
Other long-term liabilities |  |  | $ | (103 | ) |  | $ | — |  |  | $ | (103 | ) |  | $ | — |
Fixed rate long-term debt (5) (6) |  |  | $ | (15,989 | ) |  | $ | (17,259 | ) |  | $ | — |  |  | $ | — |
|  |  | 2016
|  | Carrying amount |  |  | Fair value
Asset (liability) (1) (2) |  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Investments (3) |  |  | $ | 913 |  |  | $ | 913 |  |  | $ | — |  |  | $ | — |
Other long-term assets (4) |  |  | $ | 874 |  |  | $ | — |  |  | $ | 489 |  |  | $ | 385 |
Fixed rate long-term debt (5) (6) |  |  | $ | (12,498 | ) |  | $ | (13,217 | ) |  | $ | — |  |  | $ | — |
(1) | Excludes financial assets and liabilities where the carrying amount approximates fair value due to the liquid nature of the asset or liability (cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and deferred purchase consideration payable to Marathon in March 2018).
(2) | There were no transfers between Level 1, 2 and 3 financial instruments.
(3) | The fair value of the investments are based on quoted market prices.
(4) | The fair value of Redwater Partnership subordinated debt is based on the present value of future cash receipts.
(5) | The fair value of fixed rate long-term debt has been determined based on quoted market prices.
(6) | Includes the current portion of fixed rate long-term debt.
Schedule of financial liabilities | The carrying amounts of the Company’s financial instruments by category were as follows:
|  | 2017
Asset (liability) |  | Financial assets at amortized cost |  |  | Fair value through profit or loss |  |  | Derivatives used for hedging |  |  | Financial liabilities at amortized cost |  |  | Total |
Accounts receivable |  | $ | 2,397 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,397 |
Investments |  | — |  |  | 893 |  |  | — |  |  | — |  |  | 893 |
Other long-term assets |  | 510 |  |  | — |  |  | 204 |  |  | — |  |  | 714 |
Accounts payable |  | — |  |  | — |  |  | — |  |  | (775 | ) |  | (775 | )
Accrued liabilities |  | — |  |  | — |  |  | — |  |  | (2,597 | ) |  | (2,597 | )
Other long-term liabilities (1) |  | — |  |  | (38 | ) |  | (65 | ) |  | (469 | ) |  | (572 | )
Long-term debt (2) |  | — |  |  | — |  |  | — |  |  | (22,458 | ) |  | (22,458 | )
|  | $ | 2,907 |  |  | $ | 855 |  |  | $ | 139 |  |  | $ | (26,299 | ) |  | $ | (22,398 | )
|  | 2016
Asset (liability) |  | Financial assets at amortized cost |  |  | Fair value through profit or loss |  |  | Derivatives used for hedging |  |  | Financial liabilities at amortized cost |  |  | Total |
Accounts receivable |  | $ | 1,434 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,434 |
Investments |  | — |  |  | 913 |  |  | — |  |  | — |  |  | 913 |
Other long-term assets |  | 385 |  |  | 4 |  |  | 485 |  |  | — |  |  | 874 |
Accounts payable |  | — |  |  | — |  |  | — |  |  | (595 | ) |  | (595 | )
Accrued liabilities |  | — |  |  | — |  |  | — |  |  | (2,222 | ) |  | (2,222 | )
Long-term debt (2) |  | — |  |  | — |  |  | — |  |  | (16,805 | ) |  | (16,805 | )
|  | $ | 1,819 |  |  | $ | 917 |  |  | $ | 485 |  |  | $ | (19,622 | ) |  | $ | (16,401 | )
(1) | Includes $469 million (US$375 million) of deferred purchase consideration payable to Marathon in March 2018.
(2) | Includes the current portion of long-term debt.
The fair values of the Company’s investments, recurring other long-term assets (liabilities) and fixed rate long-term debt are outlined below:
|  |  | 2017
|  | Carrying amount |  |  | Fair value
Asset (liability) (1) (2) |  |  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Investments (3) |  |  | $ | 893 |  |  | $ | 893 |  |  | $ | — |  |  | $ | — |
Other long-term assets (4) |  |  | $ | 714 |  |  | $ | — |  |  | $ | 204 |  |  | $ | 510 |
Other long-term liabilities |  |  | $ | (103 | ) |  | $ | — |  |  | $ | (103 | ) |  | $ | — |
Fixed rate long-term debt (5) (6) |  |  | $ | (15,989 | ) |  | $ | (17,259 | ) |  | $ | — |  |  | $ | — |
|  |  | 2016
|  | Carrying amount |  |  | Fair value
Asset (liability) (1) (2) |  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Investments (3) |  |  | $ | 913 |  |  | $ | 913 |  |  | $ | — |  |  | $ | — |
Other long-term assets (4) |  |  | $ | 874 |  |  | $ | — |  |  | $ | 489 |  |  | $ | 385 |
Fixed rate long-term debt (5) (6) |  |  | $ | (12,498 | ) |  | $ | (13,217 | ) |  | $ | — |  |  | $ | — |
(1) | Excludes financial assets and liabilities where the carrying amount approximates fair value due to the liquid nature of the asset or liability (cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and deferred purchase consideration payable to Marathon in March 2018).
(2) | There were no transfers between Level 1, 2 and 3 financial instruments.
(3) | The fair value of the investments are based on quoted market prices.
(4) | The fair value of Redwater Partnership subordinated debt is based on the present value of future cash receipts.
(5) | The fair value of fixed rate long-term debt has been determined based on quoted market prices.
(6) | Includes the current portion of fixed rate long-term debt.
Schedule of derivative financial instruments | At December 31, 2017 the Company had the following cross currency swap contracts outstanding:
| Remaining term | Amount | Exchange rate (US$/C$) |  | Interest rate (US$) |  | Interest rate (C$) |
Cross currency |  |  |  |  |  |  |
Swaps | Jan 2018 | — | Nov 2021 | US$500 | 1.022 |  | 3.45 | % | 3.96 | %
| Jan 2018 | — | Mar 2038 | US$550 | 1.170 |  | 6.25 | % | 5.76 | %
Schedule of information about financial instruments | The following provides a summary of the carrying amounts of derivative financial instruments held and a reconciliation to the Company’s consolidated balance sheets.
Asset (liability) |  | 2017 |  |  | 2016 |
Derivatives held for trading |  |  |  |
Foreign currency forward contracts |  | $ | (38 | ) |  | $ | 10 |
Natural gas AECO swaps |  | — |  |  | (6 | )
Cash flow hedges |  |  |  |  |  |
Foreign currency forward contracts |  | (71 | ) |  | 16 |
Cross currency swaps |  | 210 |  |  | 469 |
|  | $ | 101 |  |  | $ | 489 |
Included within: |  |  |  |  |  |
Current portion of other long-term (liabilities) assets |  | $ | (103 | ) |  | $ | 222 |
Other long-term assets |  | 204 |  |  | 267 |
|  | $ | 101 |  |  | $ | 489 |
Net loss (gain) from risk management activities for the years ended December 31 were as follows:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Net realized risk management (gain) loss |  | $ | (2 | ) |  | $ | 8 |  |  | $ | (843 | )
Net unrealized risk management loss |  | 37 |  |  | 25 |  |  | 374 |
|  | $ | 35 |  |  | $ | 33 |  |  | $ | (469 | )
The changes in estimated fair values of derivative financial instruments included in the risk management asset were recognized in the financial statements as follows:
Asset (liability) |  | 2017 |  |  | 2016 |
Balance – beginning of year |  | $ | 489 |  |  | $ | 854 |
Net change in fair value of outstanding derivative financial instruments recognized in: |  |  |  |  |  |
Risk management activities |  | (37 | ) |  | (25 | )
Foreign exchange |  | (375 | ) |  | (304 | )
Other comprehensive income (loss) |  | 24 |  |  | (36 | )
Balance – end of year |  | 101 |  |  | 489 |
Less: current portion |  | (103 | ) |  | 222 |
|  | $ | 204 |  |  | $ | 267 |
Disclosure of financial instrument sensitivities | In addition, changes in fair value generally cannot be extrapolated because the relationship of a change in an assumption to the change in fair value may not be linear.
| Increase (decrease) to net earnings |  |  | (Increase) decrease to other comprehensive loss |
Interest rate risk |  |  |  |  |
Increase interest rate 1% | $ | (42 | ) |  | $ | (16 | )
Decrease interest rate 1% | $ | 42 |  |  | $ | 19 |
Foreign currency exchange rate risk |  |  |  |  |
Increase exchange rate by US$0.01 | $ | (105 | ) |  | $ | — |
Decrease exchange rate by US$0.01 | $ | 101 |  |  | $ | — |
Schedule of maturity dates for financial liabilities | Scheduled debt repayments are as follows:
Year | Repayment |
2018 | $ | 2,027 |
2019 | $ | 4,228 |
2020 | $ | 4,231 |
2021 | $ | 760 |
2022 | $ | 1,000 |
Thereafter | $ | 10,351 |
The maturity dates for financial liabilities were as follows:
|  | Less than 1 year |  |  | 1 to less than 2 years |  |  | 2 to less than 5 years |  |  | Thereafter |
Accounts payable |  | $ | 775 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Accrued liabilities |  | $ | 2,597 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other long-term liabilities (1) |  | $ | 572 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Long-term debt (2) (3) |  | $ | 2,027 |  |  | $ | 4,228 |  |  | $ | 5,991 |  |  | $ | 10,351 |
(1) | Includes $469 million (US$375 million) of deferred purchase consideration payable to Marathon in March 2018.
(2) | Long-term debt represents principal repayments only and does not reflect interest, original issue discounts and premiums or transaction costs.
(3) | In addition to the financial liabilities disclosed above, estimated interest and other financing payments related to long-term debt are as follows: less than one year, $842 million; one to less than two years, $755 million; two to less than five years, $1,712 million; and thereafter, $5,384 million. Interest payments were estimated based upon applicable interest and foreign exchange rates as at December 31, 2017.

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