Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Nature of Goods and Services

The Company explores for and produces crude oil, natural gas and natural gas liquids (collectively oil and gas) in select basins around the globe. The Company’s revenue from sales of oil and gas production activities are primarily subdivided into two key geographic segments: the U.S. and Canada.  Additionally, revenue from sales to customers is generated from three primary revenue streams: crude oil and condensate, natural gas liquids, and natural gas.

For operated oil and gas production where the non-operated working interest owner does not take-in-kind its proportionate interest in the produced commodity, the Company acts as an agent for the working interest owner and recognizes revenue only for its own share of the commingled production. 

U.S.- In the United States, the Company primarily produces oil and gas from fields in the Eagle Ford Shale area of South Texas and in the Gulf of Mexico.  Revenue is generally recognized when oil and gas are transferred to the customer at the delivery point. Revenue recognized is largely index based with price adjustments for floating market differentials.

Canada- In Canada, contracts are primarily long-term floating commodity index priced, except for certain natural gas physical forward sales fixed-price contracts. For the Onshore business in Canada, the recorded revenue is net of transportation costs and any gain or loss on spot purchases made to meet committed volumes on sales contracts for the month. For the Offshore business in Canada, contracts are based on index prices and revenue is recognized at the time of vessel load based on the volumes on the bill of lading and point of custody transfer.

Disaggregation of Revenue

The Company reviews performance based on two key geographical segments and between onshore and offshore sources of revenue within these geographies.

For the three-months ended June 30, 2019 and 2018, the Company recognized $646.1 million and $426.8 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas. For the six-months ended June 30, 2019 and 2018 the Company recognized $1,236.7 million and $823.1 million, respectively, from contracts with customers for the sales of oil, natural gas liquids and natural gas.

		Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of dollars)		2019		2018		2019	2018
Net crude oil and condensate revenue
United States	Onshore	$	192,182	198,823		325,772	381,472
	Offshore	334,189		94,393		650,212	165,922
Canada	Onshore	26,472		28,426		53,816	49,719
	Offshore	41,518		48,316		85,364	102,631
Other		3,123		—		5,975	—
Total crude oil and condensate revenue		597,484		369,958		1,121,139	699,744
Net natural gas liquids revenue
United States	Onshore	6,384		13,236		12,525	25,370
	Offshore	2,988		2,920		7,164	4,559
Canada	Onshore	2,771		3,447		6,229	6,916
Total natural gas liquids revenue		12,143		19,603		25,918	36,845
Net natural gas revenue
United States	Onshore	5,533		6,292		11,397	13,062
	Offshore	6,643		2,825		9,149	5,762
Canada	Onshore	24,311		28,089		69,061	67,683
Total natural gas revenue		36,487		37,206		89,607	86,507
Total revenue from contracts with customers		646,114		426,767		1,236,664	823,096
Gain (loss) on crude contracts		57,916		(37,624	)	57,916	(67,126	)
Gain on sale of assets and other income		5,019		437		5,473	8,400
Total revenue		$	709,049	389,580		1,300,053	764,370

Contract Balances and Asset Recognition

As of June 30, 2019, and December 31, 2018, receivables from contracts with customers, net of royalties and associated payables, on the balance sheet from continuing operations, were $191.6 million and $147.6 million, respectively. Payment terms for the Company’s sales vary across contracts and geographical regions, with the majority of the cash receipts required within 30 days of billing. Based on historical collections and ability of customers to pay, the Company did not recognize any impairment losses on receivables or contract assets arising from customer contracts during the reporting periods.

The Company has not entered into any upstream oil and gas sale contracts that have financing components as at June 30, 2019.

The Company does not employ sales incentive strategies such as commissions or bonuses for obtaining sales contracts. For the periods presented, the Company did not identify any assets to be recognized associated with the costs to obtain a contract with a customer.

Performance Obligations

The Company recognizes oil and gas revenue when it satisfies a performance obligation by transferring control over a commodity to a customer.  Judgment is required to determine whether some customers simultaneously receive and consume the benefit of commodities. As a result of this assessment for the Company, each unit of measure of the specified commodity is considered to represent a distinct performance obligation that is satisfied at a point in time upon the transfer of control of the commodity.

For contracts with market or index-based pricing, which represent the majority of sales contracts, the Company has elected the allocation exception and allocates the variable consideration to each single performance obligation in the contract. As a result, there is no price allocation to unsatisfied remaining performance obligations for delivery of commodity product in subsequent periods.

The Company has entered into several long-term, fixed-price contracts in Canada. The underlying reason for entering a fixed price contract is generally unrelated to anticipated future prices or other observable data and serves a particular purpose in the company’s long-term strategy. The contractually stated price for each unit of commodity transferred under these contracts represents the stand-alone selling price of the commodity.

As of June 30, 2019, the Company had the following sales contracts in place which are expected to generate revenue from sales to customers for a period of 12 months or more starting at the inception of the contract:

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Current Long-Term Contracts Outstanding at June 30, 2019
Location	Commodity	End Date	Description	Approximate Volumes
U.S.	Oil	Q3 2019	Fixed quantity delivery in Eagle Ford	4,000 BOED
U.S.	Oil	Q4 2021	Fixed quantity delivery in Eagle Ford	17,000 BOED
U.S.	Oil, Gas and NGL	Q2 2026	Deliveries from dedicated acreage in Eagle Ford	As produced
Canada	Gas	Q4 2020	Contracts to sell natural gas at Alberta AECO fixed prices	59 MMCFD
Canada	Gas	Q4 2020	Contracts to sell natural gas at USD Index pricing	60 MMCFD
Canada	Gas	Q4 2024	Contracts to sell natural gas at USD Index pricing	30 MMCFD
Canada	Gas	Q4 2026	Contracts to sell natural gas at USD Index pricing	38 MMCFD

Fixed price contracts are accounted for as normal sales and purchases for accounting purposes.