Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2021

Schedule of assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis are as follows:


	As of September 30, 2021
	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

	(in millions)
Assets:
Commodity price derivatives	$	—	$	5	$	—	$	5
Deferred compensation plan assets	74		—		—		74
Investment in affiliate	144		—		—		144
Total assets	218		5		—		223
Liabilities:
Commodity price derivatives	—		1,239		—		1,239
Marketing derivatives	—		—		88		88
Total liabilities	—		1,239		88		1,327
Total recurring fair value measurements	$	218	$	(1,234)	$	(88)	$	(1,104)


	As of December 31, 2020
	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

	(in millions)
Assets:
Commodity price derivatives	$	—	$	8	$	—	$	8
Deferred compensation plan assets	72		—		—		72
Investment in affiliate	123		—		—		123
Total assets	195		8		—		203
Liabilities:
Commodity price derivatives	—		209		—		209
Marketing derivatives	—		—		91		91
Total liabilities	—		209		91		300
Total recurring fair value measurements	$	195	$	(201)	$	(91)	$	(97)

Schedule of carrying values and financial instruments not carried at fair value

Carrying values and fair values of financial instruments that are not carried at fair value in the consolidated balance sheets are as follows:


	As of September 30, 2021				As of December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value

	(in millions)
Assets:
Cash and cash equivalents (a)	$	581	$	581	$	1,442	$	1,442
Restricted cash (a) (b)	$	46	$	46	$	59	$	59
Liabilities:
Current portion of long-term debt:
Senior notes (c)	$	244	$	249	$	140	$	140
Long-term debt:
Convertible Notes (c) (d)	$	1,305	$	2,139	$	1,100	$	1,756
Senior notes (c)	$	5,380	$	5,469	$	2,060	$	2,230

______________________

(a)Fair value approximates carrying value due to the short-term nature of the instruments.

(b)Primarily relates to funds in escrow for use in future deficiency fee payments related to the South Texas Divestiture. Any remaining balance after the payment of the deficiency fees will revert to the Company on March 31, 2023.

(c)Fair value is determined using Level 2 inputs. The Company's senior notes are quoted, but not actively traded on major exchanges; therefore, fair value is based on periodic values as quoted on major exchanges. See Note 7 for additional information.

(d)Upon issuance of the Convertible Notes, the debt discount and related deferred income tax liability were recorded to additional paid-in capital. As part of the Company's early adoption of ASU 2020-06 on January 1, 2021 (see Note 2), the Company reclassified the debt discount and related deferred income tax liability of $230 million and $50 million, respectively, from additional paid-in capital to the Convertible Notes reported in long-term debt and deferred income taxes, respectively, in the consolidated balance sheets.