Acquisition of Atlas Energy Inc.

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Acquisition of Atlas Energy, Inc.

Acquisition of Atlas Energy, Inc.

On February 17, 2011, the company acquired Atlas Energy, Inc. (Atlas), which held one of the premier acreage positions in the Marcellus Shale, concentrated in southwestern Pennsylvania. The aggregate purchase price of Atlas was approximately $4,500, which included $3,009 cash for all the common shares of Atlas, a $403 cash advance to facilitate Atlas' purchase of a 49 percent interest in Laurel Mountain Midstream LLC and about $1,100 of assumed debt. Subsequent to the close of the transaction, the company paid off the assumed debt and made payments of $184 in connection with Atlas equity awards. As part of the acquisition, Chevron assumed the terms of a carry arrangement whereby Reliance Marcellus, LLC, funds 75 percent of Chevron's drilling costs, up to $1,300.

The acquisition was accounted for as a business combination (ASC 805) which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Provisional fair value measurements were made in first quarter 2011 for acquired assets and assumed liabilities, and the measurement process was finalized in fourth quarter 2011.

Proforma financial information is not presented, as it would not be materially different from the information presented in the Consolidated Statement of Income.

The following table summarizes the measurement of the assets acquired and liabilities assumed:

At February 17, 2011
Current assets	$	155
Investments and long-term receivables	456
Properties	6,051
Goodwill	27
Other assets	5
Total assets acquired	6,694
Current liabilities	(560		)
Long-term debt and capital leases	(761		)
Deferred income taxes	(1,915		)
Other liabilities	(25		)
Total liabilities assumed	(3,261		)
Net assets acquired	$	3,433

Properties were measured primarily using an income approach. The fair values of the acquired oil and gas properties were based on significant inputs not observable in the market and thus represent Level 3 measurements. Refer to Note 8, beginning on page FS-33 for a definition of fair value hierarchy levels. Significant inputs included estimated resource volumes, assumed future production profiles, estimated future commodity prices, a discount rate of 8 percent, and assumptions on the timing and amount of future operating and development costs. All the properties are in the United States and are included in the Upstream segment.

The acquisition date fair value of the consideration transferred was $3,400 in cash. The $27 of goodwill was assigned to the Upstream segment and represents the amount of the consideration transferred in excess of the values assigned to the individual assets acquired and liabilities assumed. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. None of the goodwill is deductible for tax purposes. Goodwill recorded in the acquisition is not subject to amortization, but will be tested periodically for impairment as required by the applicable accounting standard (ASC 350).