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Acquisitions And Divestitures | 12 Months Ended
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Dec. 31, 2014
Acquisitions And Divestitures [Abstract] |
Acquisitions And Divestitures | 2.Acquisitions and Divestitures Formation of EnLink Midstream, LLC and EnLink Midstream Partners, LP On March 7, 2014, Devon, Crosstex Energy, Inc. and Crosstex Energy, LP (together with Crosstex Energy, Inc., “Crosstex”) completed a transaction to combine substantially all of Devon’s U.S. midstream assets with Crosstex’s assets to form a new midstream business. The new business consists of the General Partner and EnLink, which are both publicly traded. In exchange for a controlling interest in both EnLink and the General Partner, Devon contributed its equity interest in a newly formed Devon subsidiary, EnLink Midstream Holdings, LP (“EnLink Holdings”) and $100 million in cash. EnLink Holdings owns midstream assets in the Barnett Shale in north Texas and the Cana- and Arkoma-Woodford Shales in Oklahoma, as well as an economic interest in Gulf Coast Fractionators in Mont Belvieu, Texas. As of December 31, 2014, the General Partner and EnLink each own 50% of EnLink Holdings. As of December 31, 2014, the ownership of the General Partner is approximately:
| • |  | 70% - Devon
| • |  | 30% - Public unitholders
As of December 31, 2014, the ownership of EnLink is approximately:
| • |  | 49% - Devon
| • |  | 43% - Public unitholders
| • |  | 8% - General Partner
This business combination was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, EnLink Holdings was the accounting acquirer because its parent company, Devon, obtained control of EnLink and the General Partner as a result of the business combination. Consequently, EnLink Holdings’ assets and liabilities retained their carrying values. Additionally, the Crosstex assets acquired and liabilities assumed by the General Partner and EnLink in the business combination, as well as the General Partner’s noncontrolling interest in EnLink, were recorded at their fair values which were measured as of the acquisition date, March 7, 2014. The excess of the purchase price over the estimated fair values of Crosstex’s net assets acquired was recorded as goodwill. The following table summarizes the purchase price (in millions, except unit price).
Crosstex Energy, Inc. outstanding common shares: |  |  |  |
Held by public shareholders |  |  | 48.0 |
Restricted shares |  |  | 0.4 |
Total subject to conversion |  |  | 48.4 |
Exchange ratio |  |  | 1.0 | x
Converted shares |  |  | 48.4 |
Crosstex Energy, Inc. common share price (1) |  | $ | 37.60 |
Crosstex Energy, Inc. consideration |  | $ | 1,823 |
Fair value of noncontrolling interest in E2 (2) |  |  | 18 |
Total Crosstex Energy, Inc. consideration and fair value of noncontrolling interests |  | $ | 1,841 |
Crosstex Energy, LP outstanding units: |  |  |  |
Common units held by public unitholders |  |  | 75.1 |
Preferred units held by third party (3) |  |  | 17.1 |
Restricted units |  |  | 0.4 |
Total |  |  | 92.6 |
Crosstex Energy, LP common unit price (4) |  | $ | 30.51 |
Crosstex Energy, LP common units value |  | $ | 2,825 |
Crosstex Energy, LP outstanding unit options value |  | $ | 4 |
Total fair value of noncontrolling interests in the Crosstex Energy, LP (4) |  |  | 2,829 |
Total consideration and fair value of noncontrolling interests |  | $ | 4,670 |
__________________________ (1) The final purchase price is based on the fair value of Crosstex Energy, Inc.’s common shares as of the closing date, March 7, 2014. (2) Represents the value of noncontrolling interests related to the General Partner’s equity investment in E2 Energy Services, LLC and E2 Appalachian Compression, LLC (collectively “E2”). (3) Crosstex Energy, LP converted the preferred units to common units in February 2014. (4) The final purchase price is based on the fair value of Crosstex Energy, LP’s common units as of the closing date, March 7, 2014. The allocation of the purchase price is as follows (in millions):
Assets acquired: |  |  |
Current assets |  | $ | 437
Property, plant and equipment, net |  |  | 2,438
Intangible assets |  |  | 569
Equity investment |  |  | 222
Goodwill (1) |  |  | 3,283
Other long-term assets |  |  | 1
Liabilities assumed: |  |  |
Current liabilities |  |  | (515)
Long-term debt |  |  | (1,454)
Deferred income taxes |  |  | (210)
Other long-term liabilities |  |  | (101)
Total consideration and fair value of noncontrolling interests |  | $ | 4,670
__________________________ (1) Goodwill is the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is not amortized and is not deductible for tax purposes. EnLink Acquisitions and Dropdowns On October 22, 2014, EnLink acquired equity interests in E2 Appalachian Compression, LLC and E2 Energy Services, LLC (together “E2”) from the General Partner. The total consideration for the transaction was approximately $194 million, including a $163 million cash payment and 1.0 million EnLink units valued at $31.2 million based on the fair value of the EnLink units as of the closing date of the transaction. Furthermore, on November 1, 2014, EnLink acquired Gulf Coast natural gas pipeline assets predominantly located in southern Louisiana for $23 4 million, subject to certain adjustments. GeoSouthern Energy Acquisition On February 28, 2014, Devon completed its acquisition of interests in certain affiliates of GeoSouthern Energy Corporation (“GeoSouthern”) for approximately $6.0 billion. Devon funded the acquisition with cash on hand and debt financing. In connection with the GeoSouthern transaction, Devon acquired approximately 82,000 net acres (unaudited) located in DeWitt and Lavaca counties in south Texas. The transaction was accounted for using the acquisition method, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The allocation of the purchase price is as follows (in millions).
Cash and cash equivalents |  | $ | 95
Other current assets |  |  | 256
Proved properties |  |  | 5,026
Unproved properties |  |  | 1,007
Midstream assets |  |  | 86
Current liabilities |  |  | (434)
Long-term liabilities |  |  | (6)
Net assets acquired |  | $ | 6,030
EnLink and GeoSouthern Operating Results The following table presents the General Partner’s and EnLink’s (acquired Crosstex operations) and GeoSouthern’s operating revenues and net earnings included in Devon’s consolidated comprehensive statements of earnings subsequent to the transactions described above.
|  | Year Ended December 31, 2014 |
|  | GeoSouthern |  | EnLink |
|  | (In millions) |
Total operating revenues |  | $ | 1,873 |  | $ | 2,509 |
Total operating expenses |  |  | 960 |  |  | 2,464 |
Operating income |  | $ | 913 |  | $ | 45 |
Pro Forma Financial Information The following unaudited pro forma financial information has been prepared assuming both the EnLink formation and the GeoSouthern acquisition occurred on January 1, 2013. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the business combination and acquisition had been completed at the dates indicated. In addition, they do not project Devon’s results of operations for any future period.
|  | Year Ended December 31,
|  | 2014 |  | 2013
|  | (In millions)
Total operating revenues |  | $ | 20,213 |  | $ | 12,979
Net earnings |  | $ | 1,716 |  | $ | 35
Noncontrolling interests |  | $ | 97 |  | $ | 45
Net earnings (loss) attributable to Devon |  | $ | 1,619 |  | $ | (10)
Net earnings (loss) per common share attributable to Devon |  | $ | 3.94 |  | $ | (0.02)
Asset Divestitures In November 2013, Devon announced plans to divest certain properties located throughout Canada and the U.S. Canada In the first quarter of 2014, Devon completed minor divestiture transactions for $142 million ($155 million Canadian dollars). In the second quarter of 2014, Devon sold conventional assets to Canadian Natural Resources Limited for $2.8 billion ($3.125 billion Canadian dollars). Under full cost accounting rules, sales or dispositions of oil and gas properties are generally accounted for as adjustments to capitalized costs, with no recognition of a gain or loss. However, if not recognizing a gain or loss on the disposition would otherwise significantly alter the relationship between a cost center’s capitalized costs and proved reserves, then a gain or loss must be recognized. The Canadian divestitures significantly altered such relationship. Therefore, Devon recognized gains totaling $1.1 billion ($0.6 billion after-tax) in 2014. These gains are included as a separate item in the accompanying consolidated comprehensive statements of earnings. Included in the gain calculation noted above were asset retirement obligations of approximately $700 million assumed by the purchaser as well as the derecognition of approximately $700 million of goodwill allocated to the sold assets. In conjunction with the divestitures noted above, Devon repatriated approximately $2.8 billion of proceeds to the U.S. in the second quarter of 2014. The proceeds were used to repay $0.7 billion of commercial paper and the $2.0 billion term loans that were drawn in the first quarter of 2014 to fund a portion of the GeoSouthern acquisition. Between collecting the divestiture proceeds and repatriating funds to the U.S., Devon recognized an $84 million foreign currency exchange loss and a $29 million foreign exchange currency derivative loss. These losses are included in other nonoperating items in the accompanying consolidated comprehensive statements of earnings. U.S. On August 29, 2014, Devon sold certain U.S. assets to LINN Energy for $2.2 billion ($2.0 billion after-tax proceeds). Additionally, approximately $200 million of asset retirement obligations were assumed by LINN Energy. No gain or loss was recognized on the sale. These proceeds were used towards the early retirement of $1.9 billion in senior notes in November 2014 as discussed in Note 13.

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