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Exploration and Production Activities (Unaudited) (Notes) | 12 Months Ended
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Dec. 31, 2014
Oil and Gas Exploration and Production Industries Disclosures [Abstract] |
Exploration and Production Activities | Exploration and Production Activities (Unaudited) Fidelity is involved in the development and production of oil and natural gas resources. Fidelity shares revenues and expenses from the development of specified properties in the Rocky Mountain and Mid-Continent/Gulf States regions of the United States in proportion to its ownership interests. The information that follows includes Fidelity's proportionate share of all its oil and natural gas interests. The following table sets forth capitalized costs and accumulated depreciation, depletion and amortization related to oil and natural gas producing activities at December 31:
| 2014 |  | 2013 |  | 2012 |
| (In thousands)
Subject to amortization | $ | 3,205,036 |  | $ | 2,893,010 |  | $ | 2,531,562 |
Not subject to amortization | 132,141 |  | 124,869 |  | 191,794 |
Total capitalized costs | 3,337,177 |  | 3,017,879 |  | 2,723,356 |
Less accumulated depreciation, depletion and amortization | 1,752,566 |  | 1,562,116 |  | 1,383,386 |
Net capitalized costs | $ | 1,584,611 |  | $ | 1,455,763 |  | $ | 1,339,970 |
Note: | Net capitalized costs reflect noncash write-downs of the Company's oil and natural gas properties, as discussed in Note 1.
Capital expenditures, including those not subject to amortization, related to oil and natural gas producing activities were as follows:
Years ended December 31, | 2014 |  | * | 2013 |  | * | 2012 |  | *
| (In thousands) |
Acquisitions: |  |  |  |  |  |  |  |  |
Proved properties | $ | 87,919 |  |  | $ | 1,817 |  |  | $ | 839 |  |
Unproved properties | 138,683 |  |  | 4,608 |  |  | 31,109 |  |
Exploration | 16,879 |  |  | 26,975 |  |  | 235,906 |  |
Development | 331,400 |  |  | 355,421 |  |  | 275,959 |  |
Total capital expenditures | $ | 574,881 |  |  | $ | 388,821 |  |  | $ | 543,813 |  |
* | Excludes net additions/(reductions) to property, plant and equipment related to the recognition of future liabilities for asset retirement obligations associated with the plugging and abandonment of oil and natural gas wells, as discussed in Note 10, of $(9.0) million, $(10.7) million and $(200,000) for the years ended December 31, 2014, 2013 and 2012, respectively.
The preceding table excludes proceeds from the sales of oil and natural gas properties of $246.6 million, $83.6 million and $6.0 million for the years ended December 31, 2014, 2013 and 2012, respectively. The following summary reflects income resulting from the Company's operations of oil and natural gas producing activities, excluding corporate overhead and financing costs:
Years ended December 31, | 2014 |  | 2013 |  | 2012 |
|  | (In thousands) |  |
Revenues: |  |  |
Sales to affiliates | $ | 47,045 |  | $ | 45,099 |  | $ | 35,966 |
Sales to external customers | 468,668 |  | 497,018 |  | 379,647 |
Realized gain on commodity derivatives | 8,458 |  | 173 |  | 33,628 |
Unrealized gain (loss) on commodity derivatives | 23,400 |  | (6,267 | ) | (624 | )
Production costs | 146,793 |  | 144,136 |  | 134,795 |
Depreciation, depletion and amortization* | 193,944 |  | 182,352 |  | 157,078 |
Write-downs of oil and natural gas properties | — |  | — |  | 391,800 |
Pretax income (loss) | 206,834 |  | 209,535 |  | (235,056 | )
Income tax expense (benefit) | 75,483 |  | 75,836 |  | (88,612 | )
Results of operations for producing activities | $ | 131,351 |  | $ | 133,699 |  | $ | (146,444 | )
*Includes accretion of discount for asset retirement obligations of $3.5 million, $3.6 million and $3.3 million for the years ended December 31, 2014, 2013 and 2012, respectively, as discussed in Note 10.
Estimates of proved reserves were prepared in accordance with guidelines established by the industry and the SEC. The estimates are arrived at using actual historical wellhead production trends and/or standard reservoir engineering methods utilizing available geological, geophysical, engineering and economic data. The proved reserve estimates as of December 31, 2014, 2013 and 2012, were calculated using SEC Defined Prices. Other factors used in the proved reserve estimates are current estimates of well operating and future development costs (which include asset retirement costs), taxes, timing of operations, and the interests owned by the Company in the properties. These estimates are refined as new information becomes available. The reserve estimates are prepared by internal engineers assigned to an asset team by geographic area. Senior management reviews and approves the reserve estimates to ensure they are materially accurate. In addition, the Company engaged Ryder Scott, an independent third party, to audit its proved reserve quantity estimates. Estimates of economically recoverable oil, NGL and natural gas reserves and future net revenues therefrom are based upon a number of variable factors and assumptions. For these reasons, estimates of economically recoverable reserves and future net revenues may vary from actual results. The Company's interests in oil, NGL and natural gas reserves are located in the United States and in and around the Gulf of Mexico. The changes in the Company's estimated quantities of proved oil, NGL and natural gas reserves for the year ended December 31, 2014, were as follows:
| Oil (MBbls) |  | NGL (MBbls) |  | Natural Gas (MMcf) |  | Total (MBOE) |
Proved developed and undeveloped reserves: |  |  |  |
Balance at beginning of year | 41,019 |  | 6,602 |  | 198,445 |  | 80,695 |
Production | (4,919 | ) | (609 | ) | (20,822 | ) | (8,998 | )
Extensions and discoveries | 9,654 |  | 3,634 |  | 64,420 |  | 24,025 |
Improved recovery | — |  | — |  | — |  | — |
Purchases of proved reserves | 5,463 |  | — |  | 7,711 |  | 6,748 |
Sales of proved reserves | (4,945 | ) | (3,109 | ) | (40,451 | ) | (14,796 | )
Revisions of previous estimates | (2,354 | ) | 669 |  | 35,708 |  | 4,266 |
Balance at end of year | 43,918 |  | 7,187 |  | 245,011 |  | 91,940 |
Significant changes in proved reserves for the year ended December 31, 2014, include:
• | Extensions and discoveries of 24.0 MMBOE, primarily due to drilling activity at the Company's East Texas, Bakken and Powder River Basin properties
• | Purchases of proved reserves of 6.7 MMBOE, primarily due to the purchase of working interests and leasehold positions in the Powder River Basin
• | Sales of proved reserves of (14.8) MMBOE, primarily at the Company's South Texas and Bakken properties
• | Revisions of previous estimates of 4.3 MMBOE, largely the result of higher natural gas prices and well performance revisions
The changes in the Company's estimated quantities of proved oil, NGL and natural gas reserves for the year ended December 31, 2013, were as follows:
| Oil (MBbls) |  | NGL (MBbls) |  | Natural Gas (MMcf) |  | Total (MBOE) |
Proved developed and undeveloped reserves: |  |  |  |
Balance at beginning of year | 33,453 |  | 7,153 |  | 239,278 |  | 80,486 |
Production | (4,815 | ) | (781 | ) | (28,008 | ) | (10,264 | )
Extensions and discoveries | 13,313 |  | 1,333 |  | 26,428 |  | 19,050 |
Improved recovery | — |  | — |  | — |  | — |
Purchases of proved reserves | — |  | — |  | — |  | — |
Sales of proved reserves | (1,286 | ) | (25 | ) | (40,055 | ) | (7,987 | )
Revisions of previous estimates | 354 |  | (1,078 | ) | 802 |  | (590 | )
Balance at end of year | 41,019 |  | 6,602 |  | 198,445 |  | 80,695 |
Significant changes in proved reserves for the year ended December 31, 2013, include:
• | Extension and discoveries of 19.1 MMBOE, primarily due to drilling activity and new PUD locations at the Company's Bakken and Paradox Basin properties, as well as new PUD locations at Big Horn and East Texas
• | Sales of proved reserves of (8.0) MMBOE, primarily at the Company's Green River Basin property
The changes in the Company's estimated quantities of proved oil, NGL and natural gas reserves for the year ended December 31, 2012, were as follows:
| Oil (MBbls) |  | NGL (MBbls) |  | Natural Gas (MMcf) |  | Total (MBOE) |
Proved developed and undeveloped reserves: |  |  |  |
Balance at beginning of year | 27,005 |  | 7,342 |  | 379,827 |  | 97,651 |
Production | (3,694 | ) | (828 | ) | (33,214 | ) | (10,058 | )
Extensions and discoveries | 9,874 |  | 1,817 |  | 18,386 |  | 14,756 |
Improved recovery | — |  | — |  | — |  | — |
Purchases of proved reserves | — |  | — |  | — |  | — |
Sales of proved reserves | (39 | ) | — |  | (2,307 | ) | (423 | )
Revisions of previous estimates | 307 |  | (1,178 | ) | (123,414 | ) | (21,440 | )
Balance at end of year | 33,453 |  | 7,153 |  | 239,278 |  | 80,486 |
Significant changes in proved reserves for the year ended December 31, 2012, include:
• | Extensions and discoveries of 14.8 MMBOE, primarily due to drilling activity at the Company's Bakken, South Texas and Paradox properties
• | Revisions of previous estimates of (21.4) MMBOE, largely the result of lower natural gas prices resulting in a reduction of PDP and PUD reserves principally in the Company's Coalbed, Baker, Bowdoin, East Texas and Green River Basin natural gas properties
The following table summarizes the breakdown of the Company's proved reserves between proved developed and PUD reserves at December 31:
| 2014 |  | 2013 |  | 2012 |
Proved developed reserves: |  |  |
Oil (MBbls) | 30,130 |  | 31,394 |  | 27,412 |
NGL (MBbls) | 4,217 |  | 5,322 |  | 5,342 |
Natural Gas (MMcf) | 184,437 |  | 176,546 |  | 218,259 |
Total (MBOE) | 65,086 |  | 66,140 |  | 69,131 |
PUD reserves: |  |  |
Oil (MBbls) | 13,788 |  | 9,625 |  | 6,041 |
NGL (MBbls) | 2,970 |  | 1,280 |  | 1,811 |
Natural Gas (MMcf) | 60,574 |  | 21,899 |  | 21,019 |
Total (MBOE) | 26,854 |  | 14,555 |  | 11,355 |
Total proved reserves: |  |  |
Oil (MBbls) | 43,918 |  | 41,019 |  | 33,453 |
NGL (MBbls) | 7,187 |  | 6,602 |  | 7,153 |
Natural Gas (MMcf) | 245,011 |  | 198,445 |  | 239,278 |
Total (MBOE) | 91,940 |  | 80,695 |  | 80,486 |
As of December 31, 2014, the Company had 26.9 MMBOE of PUD reserves, which is an increase of 12.3 MMBOE from December 31, 2013. The increase relates to the Company adding 21.2 MMBOE of new PUD reserves and acquiring 3.9 MMBOE. This was partially offset by the Company converting 3.7 MMBOE, requiring $98.3 million of drilling and completion capital in 2014, divesting of 6.4 MMBOE, and negative PUD revisions of 2.7 MMBOE. At December 31, 2014, the Company did not have any PUD locations that remained undeveloped for five years or more. Future development costs estimated to be spent in each of the next three years to develop PUD reserves at December 31, 2014, are $141.8 million in 2015, $157.4 million in 2016 and $120.9 million in 2017. The future development costs are prepared using year-end costs and assuming continuation of existing economic and operating conditions and are not necessarily reflective of the Company’s expectations. The timing of marketing the exploration and production business may also affect future development costs. The standardized measure of the Company's estimated discounted future net cash flows of total proved reserves associated with its various oil and natural gas interests at December 31 was as follows:
| 2014 |  | 2013 |  | 2012 |
|  | (In thousands) |  |
Future cash inflows | $ | 5,185,500 |  | $ | 4,507,000 |  | $ | 3,696,200 |
Future production costs | 1,856,900 |  | 1,734,800 |  | 1,536,500 |
Future development costs | 570,200 |  | 403,000 |  | 301,600 |
Future net cash flows before income taxes | 2,758,400 |  | 2,369,200 |  | 1,858,100 |
Future income tax expense | 686,100 |  | 545,200 |  | 304,900 |
Future net cash flows | 2,072,300 |  | 1,824,000 |  | 1,553,200 |
10% annual discount for estimated timing of cash flows | 997,400 |  | 810,000 |  | 669,800 |
Discounted future net cash flows relating to proved oil, NGL and natural gas reserves | $ | 1,074,900 |  | $ | 1,014,000 |  | $ | 883,400 |
The following are the sources of change in the standardized measure of discounted future net cash flows by year:
| 2014 |  | 2013 |  | 2012 |
|  | (In thousands) |  |
Beginning of year | $ | 1,014,000 |  | $ | 883,400 |  | $ | 978,800 |
Net revenues from production | (368,900 | ) | (398,000 | ) | (280,800 | )
Net change in sales prices and production costs related to future production | 86,300 |  | 162,200 |  | (406,300 | )
Extensions and discoveries, net of future production-related costs | 231,900 |  | 366,500 |  | 355,300 |
Improved recovery, net of future production-related costs | — |  | — |  | — |
Purchases of proved reserves, net of future production-related costs | 103,800 |  | — |  | — |
Sales of proved reserves | (219,300 | ) | (37,800 | ) | (2,600 | )
Changes in estimated future development costs | 65,100 |  | 6,700 |  | 37,600 |
Development costs incurred during the current year | 104,600 |  | 141,500 |  | 77,700 |
Accretion of discount | 109,400 |  | 94,600 |  | 121,400 |
Net change in income taxes | (33,400 | ) | (141,400 | ) | 110,000 |
Revisions of previous estimates | (16,300 | ) | (55,800 | ) | (100,700 | )
Other | (2,300 | ) | (7,900 | ) | (7,000 | )
Net change | 60,900 |  | 130,600 |  | (95,400 | )
End of year | $ | 1,074,900 |  | $ | 1,014,000 |  | $ | 883,400 |
The estimated discounted future cash inflows from estimated future production of proved reserves were computed using prices as previously discussed. Future production and development costs, which include asset retirement costs, attributable to proved reserves were computed by applying year-end costs to be incurred in producing and further developing the proved reserves. Future income tax expenses were computed by applying statutory tax rates to the estimated net future pretax cash flows less the tax basis of the oil and gas properties, adjusted for permanent differences and tax credits. The standardized measure of discounted future net cash flows does not purport to represent the fair market value of oil and natural gas properties. There are significant uncertainties inherent in estimating quantities of proved reserves and in projecting rates of production and the timing and amount of future costs. In addition, future realization of oil, NGL and natural gas prices over the remaining reserve lives may vary significantly from SEC Defined Prices.

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- Definition The entire disclosure for oil and gas producing industries. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 235 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=8451039&loc=d3e61526-109447 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 235 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=8451039&loc=d3e61555-109447 + Details
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