Segment Information

12 Months Ended

Dec. 31, 2015

Segment Information

Segment Information

(15) Segment Information

See note 2(r) for a description of the Company’s determination of its reportable segments for 2015.  Marketing of excess firm transportation capacity began in the second quarter of 2014, and was subsequently determined to be a new reportable segment.  Revenues from gathering and compression and water handling and treatment operations are primarily derived from intersegment transactions for services provided to the Company’s exploration and production operations.  Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties.

Operating segments are evaluated based on their contribution to consolidated results, which is determined by the respective operating income of each segment.  General and administrative expenses are allocated to the gathering and compression and water handling and treatment segments based on estimates of labor and overhead expenditures on those activities.  General and administrative expenses related to the marketing segment are not allocated because they are immaterial.  Other income, income taxes, and interest expense are primarily managed on a consolidated basis.  Intersegment sales are transacted at prices which approximate market.  Accounting policies for each segment are the same as the Company’s accounting policies described in note 2 to the consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the years ended December 31, 2013,  2014, and 2015 (in thousands):

	Exploration and production		Gathering and compression	Water handling and treatment	Elimination of intersegment transactions	Consolidated total
Year ended December 31, 2013:
Sales and revenues:
Third-party	$	1,313,134	—	—	—	1,313,134
Intersegment		—	22,363	35,871	(58,234)	—
Total	$	1,313,134	22,363	35,871	(58,234)	1,313,134
Operating expenses:
Lease operating	$	9,439	—	3,843	(3,843)	9,439
Gathering, compression, processing, and transportation		238,712	2,079	—	(22,363)	218,428
Depletion, depreciation, and amortization		219,757	11,346	2,773	—	233,876
General and administrative expense		391,373	23,124	10,941	—	425,438
Other operating expenses		82,787	—	1,959	—	84,746
Total		942,068	36,549	19,516	(26,206)	971,927
Operating income (loss)	$	371,066	(14,186)	16,355	(32,028)	341,207
Segment assets	$	5,859,933	561,855	230,247	(38,454)	6,613,581
Capital expenditures for segment assets	$	2,110,358	389,453	203,790	(32,028)	2,671,573

	Exploration and production		Gathering and compression	Water handling and treatment	Marketing	Elimination of intersegment transactions	Consolidated total
Year ended December 31, 2014:
Sales and revenues:
Third-party	$	2,644,953	6,810	15,265	53,604	—	2,720,632
Intersegment		195	88,936	156,660	—	(245,791)	—
Total	$	2,645,148	95,746	171,925	53,604	(245,791)	2,720,632
Operating expenses:
Lease operating	$	28,041	—	34,737	—	(33,437)	29,341
Gathering, compression, processing, and transportation		536,879	13,497	—	—	(88,963)	461,413
Depletion, depreciation, and amortization		424,684	36,972	16,240	—	—	477,896
General and administrative expense		186,335	22,035	8,331	—	(168)	216,533
Other operating expenses		128,419	1,973	1,888	103,435	—	235,715
Total		1,304,358	74,477	61,196	103,435	(122,568)	1,420,898
Operating income (loss)	$	1,340,790	21,269	110,729	(49,831)	(123,223)	1,299,734
Segment assets	$	9,920,331	1,411,470	422,885	10,456	(191,647)	11,573,495
Capital expenditures for segment assets	$	3,455,079	558,037	196,675	—	(123,223)	4,086,568

	Exploration and production		Gathering and compression	Water handling and treatment	Marketing	Elimination of intersegment transactions	Consolidated total
Year ended December 31, 2015:
Sales and revenues:
Third-party	$	3,756,629	12,353	9,647	176,229	—	3,954,858
Intersegment		4,795	218,239	147,085	—	(370,119)	—
Total	$	3,761,424	230,592	156,732	176,229	(370,119)	3,954,858
Operating expenses:
Lease operating	$	35,552	—	49,859	—	(49,400)	36,011
Gathering, compression, processing, and transportation		852,573	25,305	—	—	(218,517)	659,361
Depletion, depreciation, and amortization		622,379	61,552	25,832	—	—	709,763
General and administrative expense		183,675	40,448	10,758	—	(1,184)	233,697
Other operating expenses		222,990	3,811	3,210	299,062	(3,333)	525,740
Total		1,917,169	131,116	89,659	299,062	(272,434)	2,164,572
Operating income (loss)	$	1,844,255	99,476	67,073	(122,833)	(97,685)	1,790,286
Segment assets	$	12,466,249	1,470,691	525,004	16,123	(322,843)	14,155,224
Capital expenditures for segment assets	$	1,954,256	360,287	131,051	—	(97,685)	2,347,909