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Revenue Recognition | 9 Months Ended
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Sep. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition The FASB issued Revenue from Contracts with Customers (Topic 606) superseding virtually all existing revenue recognition guidance. We adopted this new standard in the first quarter of 2018 using the modified retrospective approach. We applied the new standard to all contracts that were not completed as of January 1, 2018 and reflected the aggregate effect of all modifications in determining and allocating the transaction price. The cumulative effect of adoption of $8 million did not have a material impact on our condensed consolidated financial statements. However, the adoption did result in certain purchase and sale contracts being recorded on a net basis, as an agent, rather than on a gross basis, as principal, due to management’s evaluation under new considerations within Topic 606 that indicated we do not have control over the specified commodity in purchase and sale contracts with the same counterparty. Such presentation change did not have an impact on income (loss) from operations, earnings per share or cash flows. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated statements of operations was as follows:
|  | Before adoption of ASC 606 |  | Adjustments |  | As Reported
|  |  |  | ($ in millions) |  |
Statement of Operations for the Three Months Ended September 30, 2018 |  |  |
Marketing revenues |  | $ | 1,508 |  |  | $ | (289 | ) |  | $ | 1,219 |
Marketing operating expenses |  | $ | 1,516 |  |  | $ | (278 | ) |  | $ | 1,238 |
Statement of Operations for the Nine Months Ended September 30, 2018 |  |  |  |
Marketing revenues |  | $ | 4,320 |  |  | $ | (582 | ) |  | $ | 3,738 |
Marketing operating expenses |  | $ | 4,365 |  |  | $ | (567 | ) |  | $ | 3,798 |
Revenue from the sale of oil, natural gas and NGL is recognized upon the transfer of control of the products, which is typically when the products are delivered to customers. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration we expect to receive in exchange for those products. Revenue from contracts with customers includes the sale of our oil, natural gas and NGL production (recorded as oil, natural gas and NGL revenues in the condensed consolidated statements of operations) as well as the sale of certain of our joint interest holders’ production which we purchase under joint operating arrangements (recorded in marketing revenues in the condensed consolidated statements of operations). In connection with the marketing of these products, we obtain control of the oil, natural gas and NGL we purchase from other interest owners at defined delivery points and deliver the product to third parties, at which time revenues are recorded. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers. We also earn revenue from other sources, including from a variety of derivative and hedging activities to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility, (recorded within oil, natural gas and NGL revenues in the condensed consolidated statements of operations) as well as a variety of oil, natural gas and NGL purchase and sale contracts with third parties for various commercial purposes, including credit risk mitigation and satisfaction of our pipeline delivery commitments (recorded within marketing revenues in the condensed consolidated statements of operations). In circumstances where we act as an agent rather than a principal, our results of operations related to oil, natural gas and NGL marketing activities are presented on a net basis. These purchase and sales contracts were accounted for as derivatives under Derivatives and Hedging (Topic 815) and were not elected as normal purchase or normal sales. We considered the principal versus agent guidance in Topic 606 in determining whether the gains and losses on these derivatives should be reported on a gross or net basis. The following table shows revenue disaggregated by operating area and product type, for the Current Quarter and the Current Period:
|  | Three Months Ended September 30, 2018
|  | Oil |  | Natural Gas |  | NGL |  | Total
|  | ($ in millions)
Marcellus |  | $ | — |  |  | $ | 184 |  |  | $ | — |  |  | $ | 184 |
Haynesville |  | — |  |  | 195 |  |  | — |  |  | 195 |
Eagle Ford |  | 399 |  |  | 36 |  |  | 58 |  |  | 493 |
Utica |  | 59 |  |  | 131 |  |  | 76 |  |  | 266 |
Mid-Continent |  | 58 |  |  | 15 |  |  | 12 |  |  | 85 |
Powder River Basin |  | 78 |  |  | 17 |  |  | 13 |  |  | 108 |
Revenue from contracts with customers |  | 594 |  |  | 578 |  |  | 159 |  |  | 1,331 |
Losses on oil, natural gas and NGL derivatives |  | (100 | ) |  | (18 | ) |  | (14 | ) |  | (132 | )
Oil, natural gas and NGL revenue |  | $ | 494 |  |  | $ | 560 |  |  | $ | 145 |  |  | $ | 1,199 |
Marketing revenue from contracts with customers |  | $ | 707 |  |  | $ | 211 |  |  | $ | 112 |  |  | $ | 1,030 |
Other marketing revenue |  | 119 |  |  | 70 |  |  | — |  |  | 189 |
Marketing revenue |  | $ | 826 |  |  | $ | 281 |  |  | $ | 112 |  |  | $ | 1,219 |
|  | Nine Months Ended September 30, 2018
|  | Oil |  | Natural Gas |  | NGL |  | Total
|  | ($ in millions)
Marcellus |  | $ | — |  |  | $ | 646 |  |  | $ | — |  |  | $ | 646 |
Haynesville |  | 2 |  |  | 603 |  |  | — |  |  | 605 |
Eagle Ford |  | 1,148 |  |  | 120 |  |  | 143 |  |  | 1,411 |
Utica |  | 179 |  |  | 350 |  |  | 189 |  |  | 718 |
Mid-Continent |  | 196 |  |  | 63 |  |  | 42 |  |  | 301 |
Powder River Basin |  | 173 |  |  | 40 |  |  | 30 |  |  | 243 |
Revenue from contracts with customers |  | 1,698 |  |  | 1,822 |  |  | 404 |  |  | 3,924 |
Losses on oil, natural gas and NGL derivatives |  | (388 | ) |  | (85 | ) |  | (27 | ) |  | (500 | )
Oil, natural gas and NGL revenue |  | $ | 1,310 |  |  | $ | 1,737 |  |  | $ | 377 |  |  | $ | 3,424 |
Marketing revenue from contracts with customers |  | $ | 2,125 |  |  | $ | 733 |  |  | $ | 324 |  |  | $ | 3,182 |
Other marketing revenue |  | 381 |  |  | 175 |  |  | — |  |  | 556 |
Marketing revenue |  | $ | 2,506 |  |  | $ | 908 |  |  | $ | 324 |  |  | $ | 3,738 |
Accounts Receivable Our accounts receivable are primarily from purchasers of oil, natural gas and NGL and from exploration and production companies that own interests in properties we operate. This industry concentration could affect our overall exposure to credit risk, either positively or negatively, because our purchasers and joint working interest owners may be similarly affected by changes in economic, industry or other conditions. We monitor the creditworthiness of all our counterparties and we generally require letters of credit or parent guarantees for receivables from parties deemed to have sub-standard credit, unless the credit risk can otherwise be mitigated. We utilize an allowance method in accounting for bad debt based on historical trends in addition to specifically identifying receivables that we believe may be uncollectible. Accounts receivable as of September 30, 2018 and December 31, 2017 are detailed below:
|  | September 30, 2018 |  | December 31, 2017
|  | ($ in millions)
Oil, natural gas and NGL sales |  | $ | 829 |  |  | $ | 959 |
Joint interest |  | 160 |  |  | 209 |
Other |  | 78 |  |  | 184 |
Allowance for doubtful accounts |  | (16 | ) |  | (30 | )
Total accounts receivable, net |  | $ | 1,051 |  |  | $ | 1,322 |

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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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