Restatement and Revision of Previously Issued Financial Statements

Restatement

Quarterly Financial Results (Unaudited). The Company’s operating results for each quarter of 2013 presented in Note 26 have been restated to reflect accrual of its annual CO₂ delivery shortfall penalties under its 30-year treating agreement with Occidental on a quarterly basis. Previously, this annual penalty was recorded in its entirety in the fourth quarter of each year. In addition to the restatement, the Company’s operating results for the fourth quarter of 2012 also have been revised to remove construction contract revenue and expense, each in the amount of $796.3 million, as discussed below.

Revisions

The Company has revised certain of the accompanying financial information, as described further below, in order to properly account for activity associated with construction of the Century Plant in Pecos County, Texas (the “Century Plant”) under the full cost method of accounting. The Company has determined that these revisions are not material to the originally issued financial statements; however, in conjunction with the Company’s need to restate its financial statements as a result of the error noted above, the Company has determined that it would be appropriate to make such adjustments. See Note 8 and Note 16 for further discussion of the Century Plant construction and an associated treating agreement.

Consolidated Balance Sheet. The Company has determined that unreimbursed costs incurred by the Company on behalf of Occidental during construction of the Century Plant that were previously presented as costs in excess of billings and contract loss should have been presented under the full cost method of accounting as an account receivable and, similarly, funds received from Occidental in excess of costs incurred by the Company on behalf of Occidental as of period end should have been presented under the full cost method of accounting as a current liability. Accordingly, the Company has revised the consolidated balance sheets as of December 31, 2013 and 2012 to reflect this presentation. This revision did not have any impact to total current assets or total current liabilities for either period.

The following tables present the impact of these corrections on the Company’s previously reported consolidated balance sheets as of December 31, 2013 and 2012 (in thousands):



	December 31, 2013
	As Reported		As Revised
Current assets
Costs in excess of billings and contract loss	$	4,079	$	—
Other current assets	$	21,831	$	25,910



	December 31, 2012
	As Reported		As Revised
Current liabilities
Accounts payable and accrued expenses	$	766,544	$	782,090
Billings and contract loss in excess of costs incurred	$	15,546	$	—

Consolidated Statement of Operations. The consolidated statement of operations for the year ended December 31, 2012 has been revised to remove construction contract revenue and expense previously recognized, each in the amount of $796.3 million, and to record such amounts directly to the Company’s full cost pool. Because contract revenue and expense previously recognized were for equal and offsetting amounts, this revision has no impact to income from operations or net income for the year ended December 31, 2012.

The following table presents the impact of these corrections on the Company’s previously reported consolidated statement of income for the year ended December 31, 2012 (in thousands):



	Year Ended December 31, 2012
	As Reported		As Revised
Revenues
Construction contract	$	796,323	N/A
Expenses
Construction contract	$	796,323	N/A

Consolidated Statements of Cash Flows. The following table presents the impact of the corrections on the Company’s previously reported consolidated statements of cash flows for the years ended December 31, 2013, 2012 and 2011 (in thousands):



	Year Ended December 31, 2013						Year Ended December 31, 2012						Year Ended December 31, 2011
	As Reported			As Revised			As Reported			As Revised			As Reported			As Revised
Changes in operating assets and liabilities increasing (decreasing) cash
Costs in excess of billings	$	(8,396	)	$	11,229		$	(89,003	)	$	(11,229	)	$	(11,013	)	$	—
Other current assets	$	810		$	(3,269	)	$	(1,586	)	$	(1,586	)	$	1,432		$	1,432
Accounts payable and accrued liabilities	$	116,999		$	101,453		$	121,889		$	44,115		$	51,522		$	40,509

In addition to the revision of the Company’s consolidated financial statements, certain information within the following notes to the consolidated financial statements has been revised and/or restated to reflect the corrections discussed above or to add disclosure language, as appropriate.


•	Note 3. Supplemental Cash Flow Information


•	Note 4. Acquisitions and Divestitures


•	Note 8. Property, Plant and Equipment


•	Note 16. Commitments and Contingencies


•	Note 23. Business Segment Information


•	Note 24. Condensed Consolidating Financial Information


•	Note 26. Quarterly Financial Results (Unaudited)(Restated)