EQUITY METHOD INTERESTS

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

The Kinetik Class A Common Stock held by the Company is treated as an interest in equity securities measured at fair value. The Company elected the fair value option for measuring its equity method interest in Kinetik based on practical expedience, variances in reporting timelines, and cost-benefit considerations. The fair value of the Company’s interest in Kinetik is determined using observable share prices on a major exchange, a Level 1 fair value measurement. Fair value adjustments are recorded as a component of “Other, net” under “Revenues and other” in the Company’s statement of consolidated operations.

The Company’s initial interest in Kinetik was measured at fair value based on the Company’s ownership of approximately 12.9 million shares of Kinetik Class A Common stock as of February 22, 2022. In March 2022, the Company sold four million of its shares of Kinetik Class A Common Stock for a loss, including underwriters fees, of $25 million, which was recorded as a component of “Gain on divestitures, net” under “Revenues and other” in the Company’s statement of consolidated operations. Refer to Note 3—Acquisitions and Divestitures for further detail. During the second quarter of 2022, Kinetik issued a two-for-one split of its common stock, resulting in the Company owning approximately 17.7 million shares.

The Company has received approximately 2.1 million shares of Kinetik’s Class A Common Stock as paid-in-kind dividends through June 30, 2023. As of June 30, 2023, the Company’s ownership of 19.8 million shares represented approximately 13 percent of Kinetik’s outstanding Class A Common Stock.

The Company recorded changes in the fair value of its equity method interest in Kinetik totaling gains of $90 million and $42 million in the second quarters of 2023 and 2022, respectively, and gains of $71 million and $66 million in the first six months of 2023 and 2022, respectively. These gains were recorded as a component of “Revenues and other” in the Company’s statement of consolidated operations.

The following table represents sales and costs associated with Kinetik:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

	(In millions)
Natural gas and NGLs sales	$	22	$	—	$	29	$	—
Purchased oil and gas sales	7		—		7		—
	$	29	$	—	$	36	$	—

Gathering, processing, and transmission costs	$	26	$	26	$	50	$	36
Purchased oil and gas costs	26		—		28		—
	$	52	$	26	$	78	$	36

As of June 30, 2023, the Company has recorded accrued costs payable to Kinetik of approximately $37 million and receivables from Kinetik of approximately $19 million.