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Oil and Natural Gas Property Transactions (Notes) | 3 Months Ended
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Mar. 31, 2017
Property, Plant and Equipment [Abstract] |
Mergers, Acquisitions and Dispositions Disclosure | Oil and Natural Gas Property Transactions Under full cost accounting rules, we accounted for the sales of oil and natural gas properties discussed below as adjustments to capitalized costs, with no recognition of gain or loss as the sales did not involve a significant change in proved reserves or significantly alter the relationship between costs and proved reserves. In the Current Quarter, we sold portions of our acreage and producing properties in our Haynesville Shale operating area in northern Louisiana for approximately $915 million, subject to certain customary post-closing adjustments. Included in the sales were approximately 119,500 net acres and interests in 576 wells that were producing approximately 80 mmcf of gas per day at the time of closing. Also in the Current Quarter, we received proceeds of $20 million for the sale of other oil and natural gas properties. In the Prior Quarter, we received proceeds of $140 million for the sale of other oil and natural gas properties, partially offset by $78 million of post-closing adjustments and other settlements for prior period divestitures. Volumetric Production Payments From time to time, we have sold certain of our producing assets located in more mature producing regions through the sale of VPPs. A VPP is a limited-term overriding royalty interest in oil and natural gas reserves that (i) entitles the purchaser to receive scheduled production volumes over a period of time from specific lease interests; (ii) is free and clear of all associated future production costs and capital expenditures; (iii) is non-recourse to the seller (i.e., the purchaser’s only recourse is to the reserves acquired); (iv) transfers title of the reserves to the purchaser; and (v) allows the seller to retain all production beyond the specified volumes, if any, after the scheduled production volumes have been delivered. For all of our VPP transactions, we novated to each of the respective VPP buyers hedges that covered all VPP volumes sold. If contractually scheduled volumes exceed the actual volumes produced from the VPP wellbores that are attributable to the ORRI conveyed, either the shortfall will be made up from future production from these wellbores (or, at our option, from our retained interest in the wellbores) through an adjustment mechanism, or the initial term of the VPP will be extended until all scheduled volumes, to the extent produced, are delivered from the VPP wellbores to the VPP buyer. We retain drilling rights on the properties below currently producing intervals and outside of producing wellbores. As the operator of the properties from which the VPP volumes have been sold, we bear the cost of producing the reserves attributable to these interests, which we include as a component of production expenses and production taxes in our condensed consolidated statements of operations in the periods these costs are incurred. As with all non-expense-bearing royalty interests, volumes conveyed in a VPP transaction are excluded from our estimated proved reserves; however, the estimated production expenses and taxes associated with VPP volumes expected to be delivered in future periods are included as a reduction of the future net cash flows attributable to our proved reserves for purposes of determining our full cost ceiling test for impairment purposes and in determining our standardized measure. Pursuant to SEC guidelines, the estimates used for purposes of determining the cost center ceiling and the standardized measure are based on current costs. Our commitment to bear the costs on any future production of VPP volumes is not reflected as a liability on our balance sheet. The costs that will apply in the future will depend on the actual production volumes as well as the production costs and taxes in effect during the periods in which the production actually occurs, which could differ materially from our current and historical costs, and production may not occur at the times or in the quantities projected, or at all. For accounting purposes, cash proceeds from the sale of VPPs were reflected as a reduction of oil and natural gas properties with no gain or loss recognized, and our proved reserves were reduced accordingly. We have also committed to purchase natural gas and liquids associated with our VPP transactions. Production purchased under these arrangements is based on market prices at the time of production, and the purchased natural gas and liquids are resold at market prices. As of March 31, 2017, we had the following VPP outstanding:
|  |  |  |  |  |  |  | Volume Sold
VPP # |  | Date of VPP |  | Location |  | Proceeds |  | Oil |  | Natural Gas |  | NGL |  | Total
|  |  |  |  |  | ($ in millions) |  | (mmbbl) |  | (bcf) |  | (mmbbl) |  | (bcfe)
9 |  | May 2011 |  | Mid-Continent |  | $ | 853 |  |  | 1.7 |  |  | 138 |  |  | 4.8 |  |  | 177 |
The volumes produced on behalf of our VPP buyers during the Current Quarter and the Prior Quarter were as follows:
Three Months Ended March 31, 2017
VPP # |  | Oil |  | Natural Gas |  | NGL |  | Total
|  | (mbbl) |  | (bcf) |  | (mbbl) |  | (bcfe)
9 |  | 35.9 |  |  | 3.1 |  |  | 82.8 |  |  | 3.8 |
Three Months Ended March 31, 2016
VPP # |  | Oil |  | Natural Gas |  | NGL |  | Total
|  | (mbbl) |  | (bcf) |  | (mbbl) |  | (bcfe)
10(a) |  | 66.0 |  |  | 1.8 |  |  | 222.7 |  |  | 3.5 |
9 |  | 39.4 |  |  | 3.4 |  |  | 89.3 |  |  | 4.1 |
4(a) |  | 10.1 |  |  | 1.9 |  |  | — |  |  | 2.0 |
3(a) |  | — |  |  | 1.5 |  |  | — |  |  | 1.5 |
2(a) |  | — |  |  | 0.9 |  |  | — |  |  | 0.9 |
1(a) |  | — |  |  | 3.3 |  |  | — |  |  | 3.3 |
|  | 115.5 |  |  | 12.8 |  |  | 312.0 |  |  | 15.3 |
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(a) | In connection with certain asset divestitures in 2016, we purchased the remaining oil and natural gas interests previously sold in connection with VPP #10, VPP #4, VPP #3, VPP #2 and VPP #1. A majority of the oil and natural gas interests purchased were subsequently sold to the buyers of the assets.
The volumes remaining to be delivered on behalf of our VPP buyers as of March 31, 2017 were as follows:
|  |  |  | Volume Remaining as of March 31, 2017
VPP # |  | Term Remaining |  | Oil |  | Natural Gas |  | NGL |  | Total
|  | (in months) |  | (mmbbl) |  | (bcf) |  | (mmbbl) |  | (bcfe)
9 |  | 47 |  | 0.5 |  |  | 42.8 |  |  | 1.1 |  |  | 52.5 |

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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 No definition available. + Details
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- References No definition available. + Details
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