Asset Impairments

12 Months Ended

Dec. 31, 2013

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.