DEVON ENERGY CORP/DE, 10-K filed on 2/28/2014
Annual Report
Document And Entity Information (USD $)
In Billions, except Share data in Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Feb. 12, 2014
Jun. 28, 2013
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
Amendment Flag
false 
 
 
Entity Registrant Name
DEVON ENERGY CORP/DE 
 
 
Entity Central Index Key
0001090012 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Document Fiscal Year Focus
2013 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Fiscal Period Focus
FY 
 
 
Entity Public Float
 
 
$ 20.9 
Entity Common Stock, Shares Outstanding
 
407.4 
 
Consolidated Comprehensive Statements Of Earnings (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenues:
 
 
 
Oil, gas and NGL sales
$ 8,522 
$ 7,153 
$ 8,315 
Oil, gas and NGL derivatives
(191)
693 
881 
Marketing and midstream revenues
2,066 
1,655 
2,249 
Total operating revenues
10,397 
9,501 
11,445 
Lease operating expenses
2,268 
2,074 
1,851 
Marketing and midstream operating expenses
1,553 
1,246 
1,716 
General and administrative expenses
617 
692 
585 
Production and property taxes
461 
414 
424 
Depreciation, depletion and amortization
2,780 
2,811 
2,248 
Asset impairments
1,976 
2,024 
 
Other operating items
121 
92 
(11)
Total operating expenses
9,776 
9,353 
6,813 
Operating income
621 
148 
4,632 
Net financing costs
417 
370 
331 
Restructuring costs
54 
74 
(2)
Other nonoperating items
21 
13 
Earnings (loss) from continuing operations before income taxes
149 
(317)
4,290 
Income tax expense (benefit)
169 
(132)
2,156 
Earnings (loss) from continuing operations
(20)
(185)
2,134 
Earnings (loss) from discontinued operations, net of tax
 
(21)
2,570 
Net earnings (loss)
(20)
(206)
4,704 
Basic net earnings (loss) per share:
 
 
 
Basic earnings (loss) from continuing operations per share
$ (0.06)
$ (0.47)
$ 5.12 
Basic earnings (loss) from discontinued operations per share
 
$ (0.05)
$ 6.17 
Basic net earnings (loss) per share
$ (0.06)
$ (0.52)
$ 11.29 
Diluted net earnings (loss) per share:
 
 
 
Diluted earnings (loss) from continuing operations per share
$ (0.06)
$ (0.47)
$ 5.10 
Diluted earnings (loss) from discontinued operations per share
 
$ (0.05)
$ 6.15 
Diluted net earnings (loss) per share
$ (0.06)
$ (0.52)
$ 11.25 
Comprehensive earnings (loss):
 
 
 
Net earnings (loss)
(20)
(206)
4,704 
Other comprehensive earnings (loss), net of tax:
 
 
 
Foreign currency translation
(548)
194 
(191)
Pension and postretirement plans
45 
Other comprehensive earnings (loss), net of tax
(503)
196 
(185)
Comprehensive earnings (loss)
$ (523)
$ (10)
$ 4,519 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Cash flows from operating activities:
 
 
 
Net earnings (loss)
$ (20)
$ (206)
$ 4,704 
Loss (earnings) from discontinued operations, net of tax
 
21 
(2,570)
Adjustments to reconcile earnings (loss) from continuing operations to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
2,780 
2,811 
2,248 
Asset impairments
1,976 
2,024 
 
Deferred income tax expense (benefit)
97 
(184)
2,299 
Derivatives and other financial instruments
135 
(660)
(886)
Cash settlements on derivatives and financial instruments
277 
865 
485 
Other noncash charges
318 
240 
241 
Net change in working capital
(298)
(50)
180 
Change in long-term other assets
10 
(36)
33 
Change in long-term other liabilities
161 
105 
(488)
Cash from operating activities - continuing operations
5,436 
4,930 
6,246 
Cash from operating activities - discontinued operations
 
26 
(22)
Net cash from operating activities
5,436 
4,956 
6,224 
Cash flows from investing activities:
 
 
 
Capital expenditures
(6,758)
(8,225)
(7,534)
Proceeds from property and equipment divestitures
419 
1,468 
129 
Purchases of short-term investments
(1,076)
(4,106)
(6,691)
Redemptions of short-term investments
3,419 
3,266 
5,333 
Other
(3)
14 
(29)
Cash from investing activities - continuing operations
(3,999)
(7,583)
(8,792)
Cash from investing activities - discontinued operations
 
57 
3,146 
Net cash from investing activities
(3,999)
(7,526)
(5,646)
Cash flows from financing activities:
 
 
 
Proceeds from borrowings of long-term debt, net of issuance costs
2,233 
2,458 
2,221 
Net short-term debt borrowing (repayments)
(1,872)
(537)
3,726 
Debt repayments
 
 
(1,760)
Credit facility borrowings
 
750 
 
Credit facility repayments
 
(750)
 
Proceeds from stock option exercises
27 
101 
Repurchases of common stock
 
 
(2,332)
Dividends paid on common stock
(348)
(324)
(278)
Excess tax benefits related to share-based compensation
13 
Net cash from financing activities
20 
1,629 
1,691 
Effect of exchange rate changes on cash
(28)
23 
(4)
Net change in cash and cash equivalents
1,429 
(918)
2,265 
Cash and cash equivalents at beginning of period
4,637 
5,555 
3,290 
Cash and cash equivalents at end of period
$ 6,066 
$ 4,637 
$ 5,555 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 6,066 
$ 4,637 
Short-term investments
 
2,343 
Accounts receivable
1,520 
1,245 
Other current assets
419 
746 
Total current assets
8,005 
8,971 
Oil and gas, based on full cost accounting:
 
 
Subject to amortization
73,995 
69,410 
Not subject to amortization
2,791 
3,308 
Total oil and gas
76,786 
72,718 
Other
6,195 
5,630 
Total property and equipment, at cost
82,981 
78,348 
Less accumulated depreciation, depletion and amortization
(54,534)
(51,032)
Property and equipment, net
28,447 
27,316 
Goodwill
5,858 
6,079 
Other long-term assets
567 
960 
Total assets
42,877 
43,326 
Current liabilities:
 
 
Accounts payable
1,229 
1,451 
Revenues and royalties payable
786 
750 
Short-term debt
4,066 1
3,189 1
Other current liabilities
574 
613 
Total current liabilities
6,655 
6,003 
Long-term debt
7,956 
8,455 
Asset retirement obligations
2,140 
1,996 
Other long-term liabilities
834 
901 
Deferred income taxes
4,793 
4,693 
Stockholders' equity:
 
 
Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 406 million shares in 2013 and 2012, respectively
41 
41 
Additional paid-in capital
3,780 
3,688 
Retained earnings
15,410 
15,778 
Accumulated other comprehensive earnings
1,268 
1,771 
Total stockholders' equity
20,499 
21,278 
Commitments and contingencies (Note 18)
   
   
Total liabilities and stockholders' equity
$ 42,877 
$ 43,326 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Consolidated Balance Sheets [Abstract]
 
 
Common stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
Common stock, shares authorized (in shares)
1,000,000,000 
1,000,000,000 
Common stock, shares issued (in shares)
406,000,000 
406,000,000 
Consolidated Statements Of Stockholders' Equity (USD $)
In Millions, except Share data
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Earnings [Member]
Treasury Stock [Member]
Total
Balance, at Dec. 31, 2010
$ 43 
$ 5,601 
$ 11,882 
$ 1,760 
$ (33)
$ 19,253 
Balance, shares, at Dec. 31, 2010
432,000,000 
 
 
 
 
 
Net earnings (loss)
 
 
4,704 
 
 
4,704 
Other comprehensive earnings (loss), net of tax
 
 
 
(185)
 
(185)
Stock option exercises
 
112 
 
 
(11)
101 
Stock option exercises, shares
2,000,000 
 
 
 
 
 
Restricted stock grants, net of cancellations, shares
1,000,000 
 
 
 
 
 
Common stock repurchased
 
 
 
 
(2,337)
(2,337)
Common stock retired
(3)
(2,378)
 
 
2,381 
 
Common stock retired, shares
(31,000,000)
 
 
 
 
 
Common stock dividends
 
 
(278)
 
 
(278)
Share-based compensation
 
159 
 
 
 
159 
Share-based compensation tax benefits
 
13 
 
 
 
13 
Balance, at Dec. 31, 2011
40 
3,507 
16,308 
1,575 
 
21,430 
Balance, shares, at Dec. 31, 2011
404,000,000 
 
 
 
 
 
Net earnings (loss)
 
 
(206)
 
 
(206)
Other comprehensive earnings (loss), net of tax
 
 
 
196 
 
196 
Stock option exercises
49 
 
 
(23)
27 
Stock option exercises, shares
1,000,000 
 
 
 
 
 
Restricted stock grants, net of cancellations, shares
1,000,000 
 
 
 
 
 
Common stock repurchased
 
 
 
 
(29)
(29)
Common stock retired
 
(52)
 
 
52 
 
Common stock dividends
 
 
(324)
 
 
(324)
Share-based compensation
 
179 
 
 
 
179 
Share-based compensation tax benefits
 
 
 
 
Balance, at Dec. 31, 2012
41 
3,688 
15,778 
1,771 
 
21,278 
Balance, shares, at Dec. 31, 2012
406,000,000 
 
 
 
 
 
Net earnings (loss)
 
 
(20)
 
 
(20)
Other comprehensive earnings (loss), net of tax
 
 
 
(503)
 
(503)
Stock option exercises
 
 
 
 
Stock option exercises, shares
 
 
 
 
 
61,000 
Common stock repurchased
 
 
 
 
(36)
(36)
Common stock retired
 
(36)
 
 
36 
 
Common stock dividends
 
 
(348)
 
 
(348)
Share-based compensation
 
121 
 
 
 
121 
Share-based compensation tax benefits
 
 
 
 
Balance, at Dec. 31, 2013
$ 41 
$ 3,780 
$ 15,410 
$ 1,268 
 
$ 20,499 
Balance, shares, at Dec. 31, 2013
406,000,000 
 
 
 
 
 
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies

1.Summary of Significant Accounting Policies

 

Devon Energy Corporation (“Devon”) is a leading independent energy company engaged primarily in the exploration, development and production of oil, natural gas and NGLs. Devon’s operations are concentrated in various North American onshore areas in the U.S. and Canada. Devon also owns natural gas pipelines, plants and treatment facilities in many of its producing areas, making it one of North America's larger processors of natural gas.

 

Accounting policies used by Devon and its subsidiaries conform to accounting principles generally accepted in the United States of America and reflect industry practices. The more significant of such policies are discussed below.

 

Principles of Consolidation

 

The accounts of Devon and its wholly owned and controlled subsidiaries are included in the accompanying financial statements. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include the following:

 

• proved reserves and related present value of future net revenues;

• the carrying value of oil and gas properties;

• derivative financial instruments;

• the fair value of reporting units and related assessment of goodwill for impairment;

• income taxes;

• asset retirement obligations;

• obligations related to employee pension and postretirement benefits; and

• legal and environmental risks and exposures.

 

Revenue Recognition and Gas Balancing

 

Oil, gas and NGL sales are recognized when production is sold to a purchaser at a fixed or determinable price, delivery has occurred, title has transferred and collectability of the revenue is probable. Delivery occurs and title is transferred when production has been delivered to a pipeline, railcar or truck. Cash received relating to future production is deferred and recognized when all revenue recognition criteria are met. Taxes assessed by governmental authorities on oil, gas and NGL sales are presented separately from such revenues in the accompanying comprehensive statements of earnings.

 

Devon follows the sales method of accounting for gas production imbalances. The volumes of gas sold may differ from the volumes to which Devon is entitled based on its interests in the properties. These differences create imbalances that are recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the underproduced owner to recoup its entitled share through production. The liability is measured based on current market prices. No receivables are recorded for those wells where Devon has taken less than its share of production unless all revenue recognition criteria are met. If an imbalance exists at the time the wells' reserves are depleted, settlements are made among the joint interest owners under a variety of arrangements.

 

Marketing and midstream revenues are recorded at the time products are sold or services are provided to third parties at a fixed or determinable price, delivery or performance has occurred, title has transferred and collectability of the revenue is probable. Revenues and expenses attributable to oil, gas and NGL purchases, transportation and processing contracts are reported on a gross basis when Devon takes title to the products and has risks and rewards of ownership.

 

During 2013, 2012 and 2011, no purchaser accounted for more than 10 percent of Devon’s operating revenues from continuing operations.

 

Derivative Financial Instruments

 

Devon is exposed to certain risks relating to its ongoing business operations, including risks related to commodity prices, interest rates and Canadian to U.S. dollar exchange rates. As discussed more fully below, Devon uses derivative instruments primarily to manage commodity price risk, interest rate risk and foreign exchange risk. Devon does not intend to issue or hold derivative financial instruments for speculative trading purposes.

 

Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. These instruments are used to manage the inherent uncertainty of future revenues due to commodity price volatility. Devon's derivative financial instruments typically include financial price swaps, basis swaps, costless price collars and call options. Under the terms of the price swaps, Devon receives a fixed price for its production and pays a variable market price to the contract counterparty. For the basis swaps, Devon receives a fixed differential between two regional index prices and pays a variable differential on the same two index prices to the contract counterparty. The price collars set a floor and ceiling price for the hedged production. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, Devon will cash-settle the difference with the counterparty to the collars. The call options give counterparties the right to purchase production at a predetermined price.

 

Devon periodically enters into interest rate swaps to manage its exposure to interest rate volatility. Devon periodically enters into foreign exchange forward contracts to manage its exposure to fluctuations in exchange rates.

 

All derivative financial instruments are recognized at their current fair value as either assets or liabilities in the balance sheet. Changes in the fair value of these derivative financial instruments are recorded in earnings unless specific hedge accounting criteria are met. For derivative financial instruments held during the three-year period ended December 31, 2013, Devon chose not to meet the necessary criteria to qualify its derivative financial instruments for hedge accounting treatment. Cash settlements with counterparties on Devon's derivative financial instruments are also recorded in earnings.

 

By using derivative financial instruments to hedge exposures to changes in commodity prices, interest rates and foreign currency rates, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon's policy to enter into derivative contracts only with investment grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon's derivative contracts generally require cash collateral to be posted if either its or the counterparty's credit rating falls below certain credit rating levels. The mark-to-market exposure threshold, above which collateral must be posted, decreases as the debt rating falls further below such credit levels. As of December 31, 2013, Devon held $3 million of cash collateral, which represented the estimated fair value of certain derivative positions in excess of Devon’s credit guidelines. The collateral is reported in other current liabilities in the accompanying balance sheet.

 

General and Administrative Expenses

 

General and administrative expenses are reported net of amounts reimbursed by working interest owners of the oil and gas properties operated by Devon and net of amounts capitalized pursuant to the full cost method of accounting.

 

Share Based Compensation

 

Devon grants stock options, restricted stock awards and other types of share-based awards to members of its Board of Directors and selected employees. All such awards are measured at fair value on the date of grant and are generally recognized as a component of general and administrative expenses in the accompanying comprehensive statements of earnings over the applicable requisite service periods. As a result of Devon’s consolidation of its U.S. operations announced in October 2012, certain share based awards were accelerated and recognized as a component of restructuring costs in the accompanying comprehensive statements of earnings.

 

Generally, Devon uses new shares from approved incentive programs to grant share-based awards and to issue shares upon stock option exercises. Shares repurchased under approved programs are available to be issued as part of Devon’s share based awards. However, Devon has historically cancelled these shares upon repurchase.

 

Income Taxes

 

Devon is subject to current income taxes assessed by the federal and various state jurisdictions in the U.S. and by other foreign jurisdictions. In addition, Devon accounts for deferred income taxes related to these jurisdictions using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets are also recognized for the future tax benefits attributable to the expected utilization of existing tax net operating loss carryforwards and other types of carryforwards. If the future utilization of some portion of carryforwards is determined to be unlikely, a valuation allowance is provided to reduce the recorded tax benefits from such assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Devon does not recognize U.S. deferred income taxes on the unremitted earnings of its foreign subsidiaries that are deemed to be indefinitely reinvested. When such earnings are no longer deemed indefinitely reinvested, Devon recognizes the appropriate deferred, or even current, income tax liabilities.

 

Devon recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not of being realized upon ultimate settlement with a taxing authority. Liabilities for unrecognized tax benefits related to such tax positions are included in other long-term liabilities unless the tax position is expected to be settled within the upcoming year, in which case the liabilities are included in other current liabilities. Interest and penalties related to unrecognized tax benefits are included in current income tax expense.

 

Net Earnings (Loss) Per Common Share 

 

Devon’s basic earnings per share amounts have been computed based on the average number of shares of common stock outstanding for the period. Basic earnings per share includes the effect of participating securities, which primarily consist of Devon's outstanding restricted stock awards. Diluted earnings per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities. Such securities primarily consist of outstanding stock options.

 

Cash and Cash Equivalents  

 

Devon considers all highly liquid investments with original contractual maturities of three months or less to be cash equivalents.

 

Investments

 

Devon periodically invests excess cash in United States and Canadian treasury securities and other marketable securities. Devon considers securities with original contractual maturities in excess of three months, but less than one year to be short-term investments. Investments with contractual maturities in excess of one year are classified as long-term, unless such investments are classified as trading or available-for-sale.

 

Devon reports its investments and other marketable securities at fair value, except for debt securities in which management has the ability and intent to hold until maturity. Such debt securities totaled $62 million and $64 million at December 31, 2013 and 2012, respectively, and are included in other long-term assets in the accompanying balance sheet. Devon has the ability to hold the securities until maturity.

 

Property and Equipment

 

Devon follows the full cost method of accounting for its oil and gas properties. Accordingly, all costs incidental to the acquisition, exploration and development of oil and gas properties, including costs of undeveloped leasehold, dry holes and leasehold equipment, are capitalized. Internal costs incurred that are directly identified with acquisition, exploration and development activities undertaken by Devon for its own account, and that are not related to production, general corporate overhead or similar activities, are also capitalized. Interest costs incurred and attributable to unproved oil and gas properties under current evaluation and major development projects of oil and gas properties are also capitalized. All costs related to production activities, including workover costs incurred solely to maintain or increase levels of production from an existing completion interval, are charged to expense as incurred.

 

Capitalized costs are depleted by an equivalent unit-of-production method, converting gas to oil at the ratio of six thousand cubic feet of gas to one barrel of oil. Depletion is calculated using the capitalized costs, including estimated asset retirement costs, plus the estimated future expenditures (based on current costs) to be incurred in developing proved reserves, net of estimated salvage values.

 

Costs associated with unproved properties are excluded from the depletion calculation until it is determined whether or not proved reserves can be assigned to such properties. Devon assesses its unproved properties for impairment quarterly. Significant unproved properties are assessed individually. Costs of insignificant unproved properties are transferred into the depletion calculation over holding periods ranging from three to four years.

 

No gain or loss is recognized upon disposal of oil and gas properties unless such disposal significantly alters the relationship between capitalized costs and proved reserves in a particular country.

 

Under the full cost method of accounting, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the full cost “ceiling” at the end of each quarter. The ceiling is calculated separately for each country and is based on the present value of estimated future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum, net of related tax effects. The estimated future net revenues exclude future cash outflows associated with settling asset retirement obligations included in the net book value of oil and gas properties.

 

Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months. Prices are held constant indefinitely and are not changed except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including derivative contracts in place that qualify for hedge accounting treatment. None of Devon's derivative contracts held during the three-year period ended December 31, 2013, qualified for hedge accounting treatment.

 

Any excess of the net book value, less related deferred taxes, over the ceiling is written off as an expense. An expense recorded in one period may not be reversed in a subsequent period even though higher commodity prices may have increased the ceiling applicable to the subsequent period.

 

Costs for midstream assets that are in use are depreciated over the assets’ estimated useful lives, using either the unit-of-production or straight-line method. Depreciation and amortization of other property and equipment, including corporate and leasehold improvements, are provided using the straight-line method based on estimated useful lives ranging from three to 60 years. Interest costs incurred and attributable to major midstream and corporate construction projects are also capitalized.

 

Devon recognizes liabilities for retirement obligations associated with tangible long-lived assets, such as producing well sites and midstream pipelines and processing plants when there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The initial measurement of an asset retirement obligation is recorded as a liability at its fair value, with an offsetting asset retirement cost recorded as an increase to the associated property and equipment on the consolidated balance sheet. When the assumptions used to estimate a recorded asset retirement obligation change, a revision is recorded to both the asset retirement obligation and the asset retirement cost. Devon’s asset retirement obligations include estimated environmental remediation costs which arise from normal operations and are associated with the retirement of such long-lived assets. The asset retirement cost is depreciated using a systematic and rational method similar to that used for the associated property and equipment.

 

Goodwill 

 

Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. Such test includes an assessment of qualitative and quantitative factors. The impairment test requires allocating goodwill and all other assets and liabilities to assigned reporting units. The fair value of each reporting unit is estimated and compared to the net book value of the reporting unit. If the estimated fair value of the reporting unit is less than the net book value, including goodwill, then the goodwill is written down to the implied fair value of the goodwill through a charge to expense. Because quoted market prices are not available for Devon's reporting units, the fair values of the reporting units are estimated based upon several valuation analyses, including comparable companies, comparable transactions and premiums paid.

 

Devon performed annual impairment tests of goodwill in the fourth quarters of 2013, 2012 and 2011. Based on these assessments, no impairment of goodwill was required.

 

The table below provides a summary of Devon's goodwill, by assigned reporting unit. The decrease in Devon’s goodwill from 2012 to 2013 was primarily due to changes in the exchange rate between the United States dollar and the Canadian dollar.

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2013

 

2012

 

 

 

 

 

 

 

 

 

(In millions)

U.S.

 

$

3,020 

 

$

3,046 

Canada

 

 

2,838 

 

 

3,033 

Total

 

$

5,858 

 

$

6,079 

 

Commitments and Contingencies

 

Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Liabilities for environmental remediation or restoration claims resulting from improper operation of assets are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. Expenditures related to such environmental matters are expensed or capitalized in accordance with Devon's accounting policy for property and equipment.

 

Fair Value Measurements

 

Certain of Devon's assets and liabilities are measured at fair value at each reporting date. Fair value represents the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants. This price is commonly referred to as the “exit price.” Fair value measurements are classified according to a hierarchy that prioritizes the inputs underlying the valuation techniques. This hierarchy consists of three broad levels:

 

·

Level 1 – Inputs consist of unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority. When available, Devon measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value.

·

Level 2 – Inputs consist of quoted prices that are generally observable for the asset or liability. Common examples of Level 2 inputs include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in markets not considered to be active.

·

Level 3 – Inputs are not observable from objective sources and have the lowest priority. The most common Level 3 fair value measurement is an internally developed cash flow model.

 

Discontinued Operations

 

All amounts related to Devon's International operations that were sold in 2012 and 2011 are classified as discontinued operations.

 

Foreign Currency Translation Adjustments

The United States dollar is the functional currency for Devon's consolidated operations except its Canadian subsidiaries, which use the Canadian dollar as the functional currency. Assets and liabilities of the Canadian subsidiaries are translated to United States dollars using the applicable exchange rate as of the end of a reporting period. Revenues, expenses and cash flow are translated using an average exchange rate during the reporting period. Translation adjustments have no effect on net income and are included in accumulated other comprehensive earnings in stockholders' equity.

Derivative Financial Instruments
Derivative Financial Instruments

2.Derivative Financial Instruments

 

Commodity Derivatives

 

As of December 31, 2013, Devon had the following open oil derivative positions. Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price Swaps

 

Price Collars

 

Call Options Sold

Period

 

Volume (Bbls/d)

 

Weighted Average Price ($/Bbl)

 

Volume (Bbls/d)

 

Weighted Average Floor Price ($/Bbl)

 

Weighted Average Ceiling Price ($/Bbl)

 

Volume (Bbls/d)

 

Weighted Average Price ($/Bbl)

Q1-Q4 2014 

 

75,000

 

$

94.14

 

70,453

 

$

89.38

 

$

100.58

 

42,000

 

$

116.43

Q1-Q4 2015

 

37,500

 

$

90.15

 

 

$

 

$

 

22,000

 

$

115.45

Q1-Q4 2016

 

 

$

 

 

$

 

$

 

12,500

 

$

95.00

 

 

 

As of December 31, 2013, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index. The second table presents Devon’s natural gas derivatives that settle against the AECO index.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price Swaps

 

Price Collars

 

Call Options Sold

Period

 

Volume (MMBtu/d)

 

Weighted Average Price ($/MMBtu)

 

Volume (MMBtu/d)

 

Weighted Average Floor Price ($/MMBtu)

 

Weighted Average Ceiling Price ($/MMBtu)

 

Volume (MMBtu/d)

 

Weighted Average Price ($/MMBtu)

Q1-Q4 2014 

 

800,000

 

$

4.42

 

460,000

 

$

4.03

 

$

4.51

 

500,000

 

$

5.00

Q1-Q4 2015

 

 

$

 

 

$

 

$

 

550,000

 

$

5.09

Q1-Q4 2016

 

 

$

 

 

$

 

$

 

110,000

 

$

5.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis Swaps

Period

 

Index

 

Volume (MMBtu/d)

 

Weighted Average Differential to Henry Hub ($/MMBtu)

Q1-Q4 2014

 

AECO

 

94,781

 

$

(0.52)

 

As of December 31, 2013, Devon had the following open NGL derivative positions. Devon’s NGL positions settle against the average of the prompt month OPIS Mont Belvieu, Texas Index.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis Swaps

Period

 

Pay

 

Volume (Bbls/d)

 

Weighted Average Differential to WTI ($/Bbl)

Q1-Q4 2014

 

Natural Gasoline

 

329

 

$

(10.85)

 

Foreign Currency Derivatives

 

As of December 31, 2013, Devon had the following open foreign currency derivative position:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward Contract

Currency

 

Contract Type

 

CAD Notional

 

Weighted Average Fixed Rate Received

 

Expiration

 

 

 

 

(In millions)

 

(CAD-USD)

 

 

Canadian Dollar

 

Sell

 

$

1,002 

 

0.938

 

March 2014

 

 

Financial Statement Presentation

 

The following table presents the net gains and losses recognized in the accompanying comprehensive statements of earnings associated with derivative financial instruments. Net gains and losses associated with Devon’s commodity derivatives are presented in oil, gas and NGL derivatives in the accompanying comprehensive statements of earnings. Net gains and losses associated with Devon’s interest rate and foreign currency derivatives are presented in other nonoperating items in the accompanying comprehensive statements of earnings. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
December 31,

 

 

2013

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Commodity derivatives

 

$

(191)

 

$

693 

 

$

881 

Interest rate derivatives

 

 

 

 

 

(15)

 

 

(11)

Foreign currency derivatives

 

 

56 

 

 

(18)

 

 

16 

Net gains (losses) recognized in comprehensive statements of earnings

 

$

(135)

 

$

660 

 

$

886 

 

The following table presents the derivative fair values included in the accompanying balance sheets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31

 

 

Balance Sheet Caption

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Asset derivatives:

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

75 

 

$

379 

Commodity derivatives

 

Other long-term assets

 

 

28 

 

 

22 

Interest rate derivatives

 

Other current assets

 

 

 —

 

 

23 

Foreign currency derivatives

 

Other current assets

 

 

 —

 

 

Total asset derivatives

 

 

 

$

103 

 

$

425 

Liability derivatives:

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current liabilities

 

$

58 

 

$

Commodity derivatives

 

Other long-term liabilities

 

 

62 

 

 

29 

Foreign currency derivatives

 

Other current liabilities

 

 

 

 

 —

Total liability derivatives

 

 

 

$

121 

 

$

32 

 

Share-Based Compensation
Share-Based Compensation

3.Share-Based Compensation 

 

On June 3, 2009, Devon's stockholders adopted the 2009 Long-Term Incentive Plan, which expires on June 2, 2019. This plan authorizes the Compensation Committee, which consists of independent non-management members of Devon's Board of Directors, to grant nonqualified and incentive stock options, restricted stock awards, performance restricted stock awards, Canadian restricted stock units, performance share units, stock appreciation rights and cash-out rights to eligible employees. The plan also authorizes the grant of nonqualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to directors.

 

In the second quarter of 2012, Devon’s stockholders adopted an amendment to the 2009 Long-Term Incentive Plan, which also expires June 2, 2019. This amendment increases the number of shares authorized for issuance from 21.5 million shares to 47.0 million shares. To calculate shares issued under the 2009 Long-Term Incentive Plan subsequent to this amendment, options and stock appreciation rights represent one share and other awards represent 2.38 shares.

 

Devon also has a stock option plan that was adopted in 2005 under which stock options were issued to certain employees. Options granted under this plan remain exercisable by the employees owning such options, but no new options or restricted stock awards will be granted under this plan.

 

Devon did not have an annual long-term incentive grant in 2013 due to revisions in the timing of the employee compensation cycle. The annual long-term incentive grant related to 2013 performance was granted in February 2014. The following table presents the effects of share-based compensation included in Devon's accompanying comprehensive statements of earnings. The vesting for certain share-based awards was accelerated as part of Devon’s consolidation of its U.S. operations announced in October 2012. The associated expense for these accelerated awards is included in restructuring costs in the accompanying comprehensive statements of earnings. See Note 6 for further details.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2013

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Gross general and administrative expense

 

$

157 

 

$

179 

 

$

181 

Share-based compensation expense capitalized pursuant to the

 

 

 

 

 

 

 

 

 

 full cost method of accounting for oil and gas properties

 

$

60 

 

$

56 

 

$

56 

Related income tax benefit

 

$

22 

 

$

31 

 

$

33 

 

Stock Options

 

In accordance with Devon’s incentive plans, the exercise price of stock options granted may not be less than the market value of the stock at the date of grant. In addition, options granted are exercisable during a period established for each grant, which may not exceed eight years from the date of grant. The recipient must pay the exercise price in cash or in common stock, or a combination thereof, at the time that the option is exercised. Generally, the service requirement for vesting ranges from zero to four years.

 

The fair value of stock options on the date of grant is expensed over the applicable vesting period. Devon estimates the fair values of stock options granted using a Black-Scholes option valuation model, which requires Devon to make several assumptions. The volatility of Devon's common stock is based on the historical volatility of the market price of Devon's common stock over a period of time equal to the expected term of the option and ending on the grant date. The dividend yield is based on Devon’s historical and current yield in effect at the date of grant. The risk-free interest rate is based on the zero-coupon United States Treasury yield for the expected term of the option at the date of grant. The expected term of the options is based on historical exercise and termination experience for various groups of employees and directors. Each group is determined based on the similarity of their historical exercise and termination behavior. The following table presents a summary of the grant-date fair values of stock options granted and the related assumptions for 2012 and 2011. All such amounts represent the weighted-average amounts for each year. No stock options were granted in 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2011

Grant-date fair value

 

 

$

22.20 

 

$

23.11 

Volatility factor

 

 

 

42.5% 

 

 

46.0% 

Dividend yield

 

 

 

1.2% 

 

 

1.0% 

Risk-free interest rate

 

 

 

1.1% 

 

 

0.8% 

Expected term (in years)

 

 

 

6.0 

 

 

4.2 

 

 

The following table presents a summary of Devon's outstanding stock options. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

Options

 

Exercise Price

 

 

Remaining Term

 

Intrinsic Value

 

 

 

(In thousands)

 

 

 

 

 

(In years)

 

(In millions)

Outstanding at December 31, 2012

 

 

7,828 

 

$

69.12 

 

 

 

 

 

 

 Exercised

 

 

(61)

 

$

57.66 

 

 

 

 

 

 

 Expired

 

 

(1,212)

 

$

68.47 

 

 

 

 

 

 

 Forfeited

 

 

(109)

 

$

69.23 

 

 

 

 

 

 

Outstanding at December 31, 2013

 

 

6,446 

 

$

69.35 

 

 

3.76 

 

$

Vested and expected to vest at December 31, 2013

 

 

6,416 

 

$

69.36 

 

 

3.75 

 

$

Exercisable at December 31, 2013

 

 

5,361 

 

$

69.50 

 

 

3.39 

 

$

 

The aggregate intrinsic value of stock options that were exercised during 2013, 2012 and 2011 was $0.3 million, $34 million and $81 million, respectively. As of December 31, 2013, Devon's unrecognized compensation cost related to unvested stock options was $19 million. Such cost is expected to be recognized over a weighted-average period of 1.6 years.

 

Restricted Stock Awards and Units

 

Restricted stock awards and units are subject to the terms, conditions, restrictions and limitations, if any, that the Compensation Committee deems appropriate, including restrictions on continued employment. Generally, the service requirement for vesting ranges from zero to four years. During the vesting period, recipients of restricted stock awards receive dividends that are not subject to restrictions or other limitations. Devon estimates the fair values of restricted stock awards and units as the closing price of Devon's common stock on the grant date of the award or unit, which is expensed over the applicable vesting period. The following table presents a summary of Devon's unvested restricted stock awards and units.

 

 

 

 

 

 

 

 

 

 

 

 

Restricted Stock Awards & Units

 

Weighted Average Grant-Date Fair Value

 

 

 

(In thousands)

 

 

 

Unvested at December 31, 2012

 

 

5,740 

 

$

61.75 

 Granted

 

 

258 

 

$

57.27 

 Vested

 

 

(2,365)

 

$

64.13 

 Forfeited

 

 

(341)

 

$

59.82 

Unvested at December 31, 2013

 

 

3,292 

 

$

59.76 

 

The aggregate fair value of restricted stock awards and units that vested during 2013, 2012 and 2011 was $141 million, $112 million and $145 million, respectively. As of December 31, 2013, Devon's unrecognized compensation cost related to unvested restricted stock awards and units was $166 million. Such cost is expected to be recognized over a weighted-average period of 2.2 years.

 

Performance Based Restricted Stock Awards

 

Performance based restricted stock awards are granted to certain members of Devon’s senior management. Vesting of the awards is dependent on Devon meeting certain internal performance targets and the recipient meeting certain service requirements. Generally, the service requirement for vesting ranges from zero to four years. If Devon meets or exceeds the performance target, the awards vest after the recipient meets the related requisite service period. If the performance target and service period requirement are not met, the award does not vest. Once vested, recipients are entitled to dividends on the awards. Devon estimates the fair values of the awards as the closing price of Devon's common stock on the grant date of the award, which is expensed over the applicable vesting period. The following table presents a summary of Devon's performance based restricted stock awards.

 

 

 

 

 

 

 

 

 

 

 

Performance Restricted Stock Awards

 

Weighted Average Grant-Date Fair Value

 

 

 

(In thousands)

 

 

 

Unvested at December 31, 2012

 

 

408 

 

$

58.25 

 Vested

 

 

(92)

 

$

65.10 

Unvested at December 31, 2013

 

 

316 

 

$

56.25 

 

As of December 31, 2013, Devon's unrecognized compensation cost related to these awards was $3 million. Such cost is expected to be recognized over a weighted-average period of 1.4 years.

 

Performance Share Units  

 

Performance share units are granted to certain members of Devon’s senior management. Each unit that vests entitles the recipient to one share of Devon common stock. The vesting of these units is based on comparing Devon’s total shareholder return (“TSR”) to the TSR of a predetermined group of fourteen peer companies over the specified two- or three-year performance period. The vesting of units may be between zero and 200 percent of the units granted depending on Devon’s TSR as compared to the peer group on the vesting date.

 

At the end of the vesting period, recipients receive dividend equivalents with respect to the number of units vested. The fair value of each performance share unit is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all grants made under the plan: (i) a risk-free interest rate based on United States Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price volatility of Devon and the designated peer group; and (iii) an estimated ranking of Devon among the designated peer group. The fair value of the unit on the date of grant is expensed over the applicable vesting period. The following table presents a summary of the grant-date fair values of performance share units granted and the related assumptions. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant-date fair value

$

61.27 

-

$

63.48 

 

$

61.27 

-

$

63.48 

 

$

80.24 

-

$

83.15 

Risk-free interest rate

 

0.26% 

-

 

0.36% 

 

 

0.26% 

-

 

0.36% 

 

 

0.28% 

-

 

0.43% 

Volatility factor

30.3%

 

30.3%

 

41.8%

Contractual term (in years)

3.0

 

3.0

 

3.0

 

The following table presents a summary of Devon's performance share units.

 

 

 

 

 

 

 

 

 

 

 

Performance Share Units

 

Weighted Average Grant-Date Fair Value

 

 

 

(In thousands)

 

 

 

Unvested at December 31, 2012

 

 

878 

 

$

66.93 

 Granted

 

 

55 

 

$

61.57 

 Forfeited

 

 

(8)

 

$

63.37 

Unvested at December 31, 2013 (1)

 

 

925 

 

$

66.64 

____________________________

(1)

A maximum of 1.9 million common shares could be awarded based upon Devon’s final TSR ranking.

 

 

As of December 31, 2013, Devon's unrecognized compensation cost related to unvested units was $24 million. Such cost is expected to be recognized over a weighted-average period of 1.6 years.

 

Asset Impairments
Asset Impairments

4. Asset impairments

 

In 2013 and 2012, Devon recognized asset impairments related to its oil and gas property and equipment and its U.S. midstream assets as presented below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2013

 

Year Ended December 31, 2012

 

 

Gross

 

Net of Taxes

 

Gross

 

Net of Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

U.S. oil and gas assets

 

$

1,110 

 

$

707 

 

$

1,793 

 

$

1,142 

Canada oil and gas assets

 

 

843 

 

 

632 

 

 

163 

 

 

122 

Midstream assets

 

 

23 

 

 

14 

 

 

68 

 

 

44 

Total asset impairments

 

$

1,976 

 

$

1,353 

 

$

2,024 

 

$

1,308 

 

Oil and Gas Impairments 

 

Under the full cost method of accounting, capitalized costs of oil and gas properties are subject to a quarterly full cost ceiling test, which is discussed in Note 1.

 

The oil and gas impairments resulted primarily from declines in the U.S. and Canada full cost ceilings. The lower ceiling values resulted primarily from decreases in the 12-month average trailing prices for oil, natural gas and NGLs, which reduced proved reserve values.

 

Midstream Impairments

 

Due to declining natural gas production resulting from low natural gas and NGL prices, Devon determined that the carrying amounts of certain of its midstream facilities were not recoverable from estimated future cash flows. Consequently, the assets were written down to their estimated fair values, which were determined using discounted cash flow models. The fair value of Devon’s midstream assets is considered a Level 3 fair value measurement.

Other Operating Items
Other Operating Items

5.Other Operating Items

 

   

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

2013

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

(In millions)

Accretion of asset retirement obligations

$

115 

 

$

110 

 

$

92 

(Gain) loss on sale of assets

 

 

 

(13)

 

 

(2)

Other

 

(3)

 

 

(5)

 

 

(101)

Other operating items

$

121 

 

$

92 

 

$

(11)

 

During 2011, Devon received $88 million of excess insurance recoveries related to certain weather and operational claims.

Restructuring Costs
Restructuring Costs

 

 

6.Restructuring Costs 

Office Consolidation

 

In October 2012, Devon announced plans to consolidate its U.S. personnel into a single operations group centrally located at the company’s corporate headquarters in Oklahoma City. As a result, Devon closed its office in Houston, transferred operational responsibilities for assets in south Texas, east Texas and Louisiana to Oklahoma City and incurred $134 million of restructuring costs associated with the consolidation.

 

Divestiture of Offshore Assets

 

In the fourth quarter of 2009, Devon announced plans to divest its offshore assets. As of December 31, 2012, Devon had divested all of its U.S. Offshore and International assets and incurred $196 million of restructuring costs associated with the divestitures.

 

Financial Statement Presentation

 

The schedule below summarizes restructuring costs presented in the accompanying comprehensive statements of earnings.

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

2013

 

2012

 

2011

 

 

 

 

 

 

 

(In millions)

Office consolidation:

 

 

 

 

 

Employee severance and retention

$                    13

 

$                    77

 

$                      -

Lease obligations and other

41 

 

 

 -

Total

54 

 

80 

 

 -

Offshore divestitures:

 

 

 

 

 

Employee severance

$                      -

 

$                     (3)

 

$                      8

Lease obligations and other

 -

 

(3)

 

(10)

Total

 -

 

(6)

 

(2)

Restructuring costs

$                    54

 

$                    74

 

$                     (2)

 

Employee severance and retention – As of December 31, 2013, Devon had incurred $90 million of employee severance and retention costs associated with the office consolidation. This included amounts related to cash severance costs and accelerated vesting of share-based grants.

 

Lease obligations and other - As of December 31, 2013, Devon had incurred $28 million of restructuring costs related to certain office space that is subject to non-cancellable operating lease agreements and that it ceased using as a part of the office consolidation. Devon’s estimate of lease obligations was based upon certain key estimates that could change over the term of the leases. These estimates include the estimated sublease income that it may receive over the term of the leases, as well as the amount of variable operating costs that it will be required to pay under the leases.

 

 

The schedule below summarizes Devon’s restructuring liabilities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Other

 

 

 

 

 

Current

 

Long-Term

 

 

 

 

 

Liabilities

 

Liabilities

 

Total

 

 

 

 

 

 

 

 

 

 

 

  

(In millions)

Balance as of December 31, 2011

  

$

29 

 

$

16 

 

$

45 

Employee severance – Office consolidation

 

 

49 

 

 

 —

 

 

49 

Lease obligations – Offshore

 

 

(17)

 

 

(7)

 

 

(24)

Employee severance – Offshore

  

 

(9)

 

 

 —

 

 

(9)

Balance as of December 31, 2012

  

 

52 

  

 

  

 

61 

Employee severance – Office consolidation

  

 

(43)

 

 

 —

 

 

(43)

Lease obligations – Offshore

  

 

(3)

 

 

(2)

 

 

(5)

Lease obligations and other – Office consolidation

 

 

21 

 

 

11 

 

 

32 

Balance as of December 31, 2013

  

$

27 

  

$

18 

  

$

45 

 

Income Taxes
Income Taxes

7.Income Taxes

Income Tax Expense (Benefit)

 

Devon’s income tax components are presented in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2013

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

Current income tax expense (benefit):

 

 

 

 

 

 

 

 

 

United States federal

 

$

73 

 

$

60 

 

$

(143)

Various states

 

 

(5)

 

 

(3)

 

 

20 

Canada and various provinces

 

 

 

 

(5)

 

 

(20)

Total current tax expense (benefit)

 

 

72 

 

 

52 

 

 

(143)

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

United States federal

 

 

198