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Discontinued operations | 9 Months Ended
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Sep. 30, 2016
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued operations | Discontinued operations The assets and liabilities of the Company's discontinued operations have been classified as held for sale and the results of operations are shown in loss from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. The Company's consolidated financial statements and accompanying notes for current and prior periods have been restated. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded. Dakota Prairie Refining On June 24, 2016, WBI Energy entered into a membership interest purchase agreement with Tesoro to sell all of the outstanding membership interests in Dakota Prairie Refining to Tesoro. WBI Energy and Calumet each previously owned 50 percent of the Dakota Prairie Refining membership interests and were equal members in building and operating Dakota Prairie Refinery. To effectuate the sale, WBI Energy acquired Calumet’s 50 percent membership interest in Dakota Prairie Refining on June 27, 2016. The sale of the membership interests to Tesoro closed on June 27, 2016. The sale of Dakota Prairie Refining reduces the Company’s risk by decreasing exposure to commodity prices. In connection with the sale, WBI Energy has cash in an escrow account for RINs obligations, which is included in current assets held for sale on the Consolidated Balance Sheet at September 30, 2016. The Company retained certain liabilities of Dakota Prairie Refining which are reflected in current liabilities held for sale on the Consolidated Balance Sheet at September 30, 2016. In October 2016, the RINs liability was paid and the cash was removed from escrow. Also, Centennial continues to guarantee certain debt obligations of Dakota Prairie Refining; however, Tesoro has agreed to indemnify Centennial for any losses and litigation expenses arising from the guarantee. For more information related to the guarantee, see Note 19. The carrying amounts of the major classes of assets and liabilities that are classified as held for sale related to the operations of and activity associated with Dakota Prairie Refining on the Company's Consolidated Balance Sheets were as follows:
| September 30, 2016 |  | September 30, 2015 |  |  | December 31, 2015 |  |
| (In thousands) |
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | — |  | $ | 564 |  |  | $ | 688 |  |
Receivables, net | 13 |  | 14,648 |  |  | 7,693 |  |
Inventories | — |  | 12,354 |  |  | 13,176 |  |
Deferred income taxes | — |  | 116 |  | (a) | — |  |
Income taxes receivable | 32,388 |  | — |  |  | 2,495 |  |
Prepayments and other current assets | 7,741 |  | 7,125 |  |  | 6,214 |  |
Total current assets held for sale | 40,142 |  | 34,807 |  |  | 30,266 |  |
Noncurrent assets: |  |  |  |  |
Net property, plant and equipment | — |  | 415,817 |  |  | 412,717 |  |
Deferred income taxes | 2,984 |  | — |  |  | — |  |
Other | — |  | 5,052 |  |  | 9,627 |  |
Total noncurrent assets held for sale | 2,984 |  | 420,869 |  |  | 422,344 |  |
Total assets held for sale | $ | 43,126 |  | $ | 455,676 |  |  | $ | 452,610 |  |
Liabilities |  |  |  |  |
Current liabilities: |  |  |  |  |
Short-term borrowings | $ | — |  | $ | 29,500 |  |  | $ | 45,500 |  |
Long-term debt due within one year | — |  | 4,125 |  |  | 5,250 |  |
Accounts payable | 7,063 |  | 21,472 |  |  | 24,468 |  |
Taxes payable | — |  | 7,470 |  |  | 1,391 |  |
Deferred income taxes | — |  | — |  |  | 272 |  |
Accrued compensation | — |  | 1,059 |  |  | 938 |  |
Other accrued liabilities | 7,743 |  | 1,217 |  |  | 4,953 |  |
Total current liabilities held for sale | 14,806 |  | 64,843 |  |  | 82,772 |  |
Noncurrent liabilities: |  |  |  |  |
Long-term debt | — |  | 64,875 |  |  | 63,750 |  |
Deferred income taxes | — |  | 11,632 |  | (b) | 23,569 |  | (b)
Total noncurrent liabilities held for sale | — |  | 76,507 |  |  | 87,319 |  |
Total liabilities held for sale | $ | 14,806 |  | $ | 141,350 |  |  | $ | 170,091 |  |
(a) | On the Company's Consolidated Balance Sheet, this amount was reclassified to a current deferred income tax liability and is reflected in
current liabilities held for sale.
(b) | On the Company's Consolidated Balance Sheets, these amounts were reclassified to noncurrent deferred income tax assets and are
reflected in noncurrent assets held for sale.
The Company performed a fair value assessment of the assets and liabilities classified as held for sale. In the second quarter of 2016, the fair value assessment was determined using the market approach based on the sale transaction to Tesoro. The fair value assessment indicated an impairment based on the carrying value exceeding the fair value, which resulted in the Company recording an impairment of $251.9 million ($156.7 million after tax) in the quarter ended June 30, 2016. The impairment was included in operating expenses from discontinued operations. The fair value of Dakota Prairie Refining’s assets has been categorized as Level 3 in the fair value hierarchy. At September 30, 2016, Dakota Prairie Refining had not incurred any material exit and disposal costs, and does not expect to incur any material exit and disposal costs. Fidelity In the second quarter of 2015, the Company began the marketing and sale process of Fidelity with an anticipated sale to occur within one year. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell all of Fidelity's marketed oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. The sale of Fidelity was part of the Company's strategic plan to grow its capital investments in the remaining business segments and to focus on creating a greater long-term value. The carrying amounts of the major classes of assets and liabilities that are classified as held for sale related to the operations of Fidelity on the Company's Consolidated Balance Sheets were as follows:
| September 30, 2016 |  | September 30, 2015 |  | December 31, 2015 |
| (In thousands)
Assets |  |  |
Current assets: |  |  |
Receivables, net | $ | 7,930 |  | $ | 24,703 |  | $ | 13,387 |
Inventories | — |  | 7,034 |  | 1,308 |
Commodity derivative instruments | — |  | 8,633 |  | — |
Income taxes receivable | 45,294 |  | — |  | 9,665 |
Prepayments and other current assets | — |  | 42,762 |  | 221 |
Total current assets held for sale | 53,224 |  | 83,132 |  | 24,581 |
Noncurrent assets: |  |  |
Investments | — |  | 37 |  | 37 |
Net property, plant and equipment | 5,507 |  | 1,114,285 |  | 793,422 |
Deferred income taxes | 61,347 |  | 141,556 |  | 127,655 |
Other | 161 |  | 162 |  | 161 |
Less allowance for impairment of assets held for sale | 938 |  | 756,127 |  | 754,541 |
Total noncurrent assets held for sale | 66,077 |  | 499,913 |  | 166,734 |
Total assets held for sale | $ | 119,301 |  | $ | 583,045 |  | $ | 191,315 |
Liabilities |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 175 |  | $ | 32,375 |  | $ | 25,013 |
Taxes payable | — |  | 3,769 |  | 1,052 |
Deferred income taxes | 4,120 |  | 4,955 |  | 3,620 |
Accrued compensation | — |  | 5,982 |  | 13,080 |
Other accrued liabilities | 3,084 |  | 11,820 |  | 4,838 |
Total current liabilities held for sale | 7,379 |  | 58,901 |  | 47,603 |
Noncurrent liabilities: |  |  |
Other | — |  | 31,242 |  | — |
Total noncurrent liabilities held for sale | — |  | 31,242 |  | — |
Total liabilities held for sale | $ | 7,379 |  | $ | 90,143 |  | $ | 47,603 |
The Company performed a fair value assessment of the assets and liabilities classified as held for sale. In the second quarter of 2016, the fair value assessment was determined using the income and market approaches. The income approach was determined by using the present value of future estimated cash flows. The market approach was based on market transactions of similar properties. The estimated carrying value exceeded the fair value and the Company recorded an impairment of $900,000 ($600,000 after tax) in the second quarter of 2016. In the first quarter of 2016, the fair value assessment was determined using the market approach largely based on a purchase and sale agreement. The estimated fair value exceeded the carrying value and the Company recorded an impairment reversal of $1.4 million ($900,000 after tax) in the first quarter of 2016. The Company recorded fair value impairments of $356.1 million ($224.4 million after tax) and $756.1 million ($476.4 million after tax) for the three and nine months ended September 30, 2015, respectively, related to the assets and liabilities classified as held for sale. The impairments and impairment reversal were included in operating expenses from discontinued operations. The estimated fair value of Fidelity's assets have been categorized as Level 3 in the fair value hierarchy. For more information related to the 2015 fair value impairments, see Part II, Item 8 - Note 2, in the 2015 Annual Report. The Company incurred transaction costs of approximately $300,000 in the first quarter of 2016, and $2.5 million in 2015. In addition to the transaction costs, and due in part to the change in plans to sell the assets of Fidelity rather than sell Fidelity as a company, Fidelity incurred and expensed approximately $5.6 million of exit and disposal costs for the nine months ended September 30, 2016, and has incurred $10.5 million of exit and disposal costs to date. Fidelity incurred no exit and disposal costs for the three months ended September 30, 2016, and the Company does not expect to incur any additional material exit and disposal costs. The exit and disposal costs are associated with severance and other related matters and exclude the office lease expiration discussed in the following paragraph. Fidelity vacated its office space in Denver, Colorado. The Company incurred lease payments of approximately $900,000 in 2016. Lease termination payments of $3.2 million and $3.3 million were made during the second quarter of 2016 and fourth quarter of 2015, respectively. Existing office furniture and fixtures were relinquished to the lessor in the second quarter of 2016. Historically, the Company used the full-cost method of accounting for its oil and natural gas production activities. Under this method, all costs incurred in the acquisition, exploration and development of oil and natural gas properties are capitalized and amortized on the units-of-production method based on total proved reserves. Prior to the oil and natural gas properties being classified as held for sale, capitalized costs were subject to a "ceiling test" that limits such costs to the aggregate of the present value of future net cash flows from proved reserves discounted at 10 percent, as mandated under the rules of the SEC, plus the cost of unproved properties not subject to amortization, plus the effects of cash flow hedges, less applicable income taxes. Proved reserves and associated future cash flows are determined based on SEC Defined Prices and exclude cash outflows associated with asset retirement obligations that have been accrued on the balance sheet. If capitalized costs, less accumulated amortization and related deferred income taxes, exceed the full-cost ceiling at the end of any quarter, a permanent noncash write-down is required to be charged to earnings in that quarter regardless of subsequent price changes. The Company's capitalized cost under the full-cost method of accounting exceeded the full-cost ceiling at March 31, 2015. SEC Defined Prices, adjusted for market differentials, were used to calculate the ceiling test. Accordingly, the Company was required to write down its oil and natural gas producing properties. The Company recorded a $500.4 million ($315.3 million after tax) noncash write-down in operating expenses from discontinued operations in the first quarter of 2015. Dakota Prairie Refining and Fidelity The reconciliation of the major classes of income and expense constituting pretax income (loss) from discontinued operations, which includes Dakota Prairie Refining and Fidelity, to the after-tax net loss from discontinued operations on the Company's Consolidated Statements of Income was as follows:
| Three Months Ended | Nine Months Ended
| September 30, | September 30,
| 2016 |  | 2015 |  | 2016 |  | 2015 |
| (In thousands)
Operating revenues | $ | 162 |  | $ | 140,428 |  | $ | 122,894 |  | $ | 288,537 |
Operating expenses | 230 |  | 478,798 |  | 513,756 |  | 1,565,579 |
Operating loss | (68 | ) | (338,370 | ) | (390,862 | ) | (1,277,042 | )
Other income | 375 |  | 298 |  | 762 |  | 2,758 |
Interest expense | — |  | 703 |  | 1,753 |  | 1,221 |
Income (loss) from discontinued operations before income taxes | 307 |  | (338,775 | ) | (391,853 | ) | (1,275,505 | )
Income taxes | 5,707 |  | (115,663 | ) | (92,315 | ) | (458,988 | )
Loss from discontinued operations | (5,400 | ) | (223,112 | ) | (299,538 | ) | (816,517 | )
Loss from discontinued operations attributable to noncontrolling interest | — |  | (9,778 | ) | (131,691 | ) | (21,060 | )
Loss from discontinued operations attributable to the Company | $ | (5,400 | ) | $ | (213,334 | ) | $ | (167,847 | ) | $ | (795,457 | )
The pretax income (loss) from discontinued operations attributable to the Company, related to the operations of and activity associated with Dakota Prairie Refining, were $935,000 and $(8.6) million for the three months ended and $(253.0) million and $(18.4) million for the nine months ended September 30, 2016 and 2015, respectively.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721665-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5C -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=64862545&loc=d3e2941-110230 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5B -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5D -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1474-107760 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760 + Details
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