|
|
 | | | |
- close
- close
- close
- close
These excerpts taken from the DVN 10-K filed Feb 27, 2009. Policy
Description
We follow the full cost method of accounting for our oil and gas
properties. The full cost method subjects companies to quarterly
calculations of a “ceiling,” or limitation on the
amount of properties that can be capitalized on the balance
sheet. The ceiling limitation is the discounted estimated
after-tax future net revenues from proved oil and gas
properties, excluding future cash outflows associated with
settling asset retirement obligations included in the net book
value of oil and gas properties, plus the cost of properties not
subject to amortization. If our net book value of oil and gas
properties, less related deferred income taxes, is in excess of
the calculated ceiling, the excess must be written off as an
expense, except as discussed in the following paragraph. The
ceiling limitation is imposed separately for each country in
which we have oil and gas properties. An expense recorded in one
period may not be reversed in a subsequent period even though
higher oil and gas prices may have increased the ceiling
applicable to the subsequent period.
If, subsequent to the end of the quarter but prior to the
applicable financial statements being published, prices increase
to levels such that the ceiling would exceed the costs to be
recovered, a writedown otherwise indicated at the end of the
quarter is not required to be recorded. A writedown indicated at
the end of a quarter is also not required if the value of
additional reserves proved up on properties after the end of the
quarter but prior to the publishing of the financial statements
would result in the ceiling exceeding the costs to be recovered,
as long as the properties were owned at the end of the quarter.
Policy
Description
We follow the full cost method of accounting for our oil and gas
properties. The full cost method subjects companies to quarterly
calculations of a “ceiling,” or limitation on the
amount of properties that can be capitalized on the balance
sheet. The ceiling limitation is the discounted estimated
after-tax future net revenues from proved oil and gas
properties, excluding future cash outflows associated with
settling asset retirement obligations included in the net book
value of oil and gas properties, plus the cost of properties not
subject to amortization. If our net book value of oil and gas
properties, less related deferred income taxes, is in excess of
the calculated ceiling, the excess must be written off as an
expense, except as discussed in the following paragraph. The
ceiling limitation is imposed separately for each country in
which we have oil and gas properties. An expense recorded in one
period may not be reversed in a subsequent period even though
higher oil and gas prices may have increased the ceiling
applicable to the subsequent period.
If, subsequent to the end of the quarter but prior to the
applicable financial statements being published, prices increase
to levels such that the ceiling would exceed the costs to be
recovered, a writedown otherwise indicated at the end of the
quarter is not required to be recorded. A writedown indicated at
the end of a quarter is also not required if the value of
additional reserves proved up on properties after the end of the
quarter but prior to the publishing of the financial statements
would result in the ceiling exceeding the costs to be recovered,
as long as the properties were owned at the end of the quarter.
Policy
Description
We periodically enter into derivative financial instruments with
respect to a portion of our oil and gas production that hedge
the future prices received. These instruments are used to manage
the inherent uncertainty of future revenues due to oil and gas
price volatility. Our derivative financial instruments include
financial price swaps and costless price collars. Under the
terms of the swaps, we will receive a fixed price for our
production and pay a variable market price to the contract
counterparty. The price collars set a floor and ceiling price
for the hedged production. If the applicable monthly price
indices are outside of the ranges set by the floor and ceiling
prices in the various collars, we will cash-settle the
difference with the counterparty to the collars.
We periodically enter into interest rate swaps to manage our
exposure to interest rate volatility. We use these swaps to
mitigate a portion of the fair value effects of interest rate
fluctuations on our fixed-rate debt. Under the terms of these
swaps, we receive a fixed rate and pay a variable rate on a
total notional amount.
All derivative financial instruments are recognized at their
current fair value as either assets or liabilities in the
balance sheet. Changes in the fair value of these derivative
financial instruments are recorded in the statement of
operations unless specific hedge accounting criteria are met. If
such criteria are met for cash flow hedges, the effective
portion of the change in the fair value is recorded directly to
accumulated other comprehensive income, a component of
stockholders’ equity, until the hedged transaction occurs.
The ineffective portion of the change in fair value is recorded
in the statement of operations. If such criteria are met for
fair value hedges, the change in the fair value is recorded in
the statement of operations with an offsetting amount recorded
for the change in fair value of the hedged item. Cash
settlements with counterparties to our derivative financial
instruments also increase or decrease earnings at the time of
the settlement.
A derivative financial instrument qualifies for hedge accounting
treatment if we designate the instrument as such on the date the
derivative contract is entered into or the date of a business
combination or other transaction that includes derivative
contracts. Additionally, we must document the relationship
between the
Table of Contents
hedging instrument and hedged item, as well as the
risk-management objective and strategy for undertaking the
instrument. We must also assess, both at the instrument’s
inception and on an ongoing basis, whether the derivative is
highly effective in offsetting the change in cash flow of the
hedged item. For derivative financial instruments held during
2008, 2007 and 2006, we chose not to meet the necessary criteria
to qualify our derivative financial instruments for hedge
accounting treatment.
Policy
Description
We periodically enter into derivative financial instruments with
respect to a portion of our oil and gas production that hedge
the future prices received. These instruments are used to manage
the inherent uncertainty of future revenues due to oil and gas
price volatility. Our derivative financial instruments include
financial price swaps and costless price collars. Under the
terms of the swaps, we will receive a fixed price for our
production and pay a variable market price to the contract
counterparty. The price collars set a floor and ceiling price
for the hedged production. If the applicable monthly price
indices are outside of the ranges set by the floor and ceiling
prices in the various collars, we will cash-settle the
difference with the counterparty to the collars.
We periodically enter into interest rate swaps to manage our
exposure to interest rate volatility. We use these swaps to
mitigate a portion of the fair value effects of interest rate
fluctuations on our fixed-rate debt. Under the terms of these
swaps, we receive a fixed rate and pay a variable rate on a
total notional amount.
All derivative financial instruments are recognized at their
current fair value as either assets or liabilities in the
balance sheet. Changes in the fair value of these derivative
financial instruments are recorded in the statement of
operations unless specific hedge accounting criteria are met. If
such criteria are met for cash flow hedges, the effective
portion of the change in the fair value is recorded directly to
accumulated other comprehensive income, a component of
stockholders’ equity, until the hedged transaction occurs.
The ineffective portion of the change in fair value is recorded
in the statement of operations. If such criteria are met for
fair value hedges, the change in the fair value is recorded in
the statement of operations with an offsetting amount recorded
for the change in fair value of the hedged item. Cash
settlements with counterparties to our derivative financial
instruments also increase or decrease earnings at the time of
the settlement.
A derivative financial instrument qualifies for hedge accounting
treatment if we designate the instrument as such on the date the
derivative contract is entered into or the date of a business
combination or other transaction that includes derivative
contracts. Additionally, we must document the relationship
between the
Table of Contents
hedging instrument and hedged item, as well as the
risk-management objective and strategy for undertaking the
instrument. We must also assess, both at the instrument’s
inception and on an ongoing basis, whether the derivative is
highly effective in offsetting the change in cash flow of the
hedged item. For derivative financial instruments held during
2008, 2007 and 2006, we chose not to meet the necessary criteria
to qualify our derivative financial instruments for hedge
accounting treatment.
Policy
Description
From our beginning as a public company in 1988 through 2003, we
grew substantially through acquisitions of other oil and gas
companies. Most of these acquisitions have been accounted for
using the purchase method of accounting. Current accounting
pronouncements require the purchase method to be used to account
for any future acquisitions.
Under the purchase method, the acquiring company adds to its
balance sheet the estimated fair values of the acquired
company’s assets and liabilities. Any excess of the
purchase price over the fair values of the tangible and
intangible net assets acquired is recorded as goodwill. Goodwill
is assessed for impairment at least annually.
Policy
Description
From our beginning as a public company in 1988 through 2003, we
grew substantially through acquisitions of other oil and gas
companies. Most of these acquisitions have been accounted for
using the purchase method of accounting. Current accounting
pronouncements require the purchase method to be used to account
for any future acquisitions.
Under the purchase method, the acquiring company adds to its
balance sheet the estimated fair values of the acquired
company’s assets and liabilities. Any excess of the
purchase price over the fair values of the tangible and
intangible net assets acquired is recorded as goodwill. Goodwill
is assessed for impairment at least annually.
Policy
Description
Goodwill represents the excess of the purchase price of business
combinations over the fair value of the net assets acquired and
is tested for impairment at least annually. The impairment test
requires allocating goodwill and all other assets and
liabilities to assigned reporting units. The fair value of each
reporting unit is estimated and compared to the net book value
of the reporting unit. If the estimated fair value of the
reporting unit is less than the net book value, including
goodwill, then the goodwill is written down to the implied fair
value of the goodwill through a charge to expense.
Policy
Description
Goodwill represents the excess of the purchase price of business
combinations over the fair value of the net assets acquired and
is tested for impairment at least annually. The impairment test
requires allocating goodwill and all other assets and
liabilities to assigned reporting units. The fair value of each
reporting unit is estimated and compared to the net book value
of the reporting unit. If the estimated fair value of the
reporting unit is less than the net book value, including
goodwill, then the goodwill is written down to the implied fair
value of the goodwill through a charge to expense.
Policy Description We follow the full cost method of accounting for our oil and gas properties. The full cost method subjects companies to quarterly calculations of a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet. The ceiling limitation is the discounted estimated after-tax future net revenues from proved oil and gas properties, excluding future cash outflows associated with settling asset retirement obligations included in the net book value of oil and gas properties, plus the cost of properties not subject to amortization. If our net book value of oil and gas properties, less related deferred income taxes, is in excess of the calculated ceiling, the excess must be written off as an expense, except as discussed in the following paragraph. The ceiling limitation is imposed separately for each country in which we have oil and gas properties. An expense recorded in one period may not be reversed in a subsequent period even though higher oil and gas prices may have increased the ceiling applicable to the subsequent period. If, subsequent to the end of the quarter but prior to the applicable financial statements being published, prices increase to levels such that the ceiling would exceed the costs to be recovered, a writedown otherwise indicated at the end of the quarter is not required to be recorded. A writedown indicated at the end of a quarter is also not required if the value of additional reserves proved up on properties after the end of the quarter but prior to the publishing of the financial statements would result in the ceiling exceeding the costs to be recovered, as long as the properties were owned at the end of the quarter. Policy Description We follow the full cost method of accounting for our oil and gas properties. The full cost method subjects companies to quarterly calculations of a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet. The ceiling limitation is the discounted estimated after-tax future net revenues from proved oil and gas properties, excluding future cash outflows associated with settling asset retirement obligations included in the net book value of oil and gas properties, plus the cost of properties not subject to amortization. If our net book value of oil and gas properties, less related deferred income taxes, is in excess of the calculated ceiling, the excess must be written off as an expense, except as discussed in the following paragraph. The ceiling limitation is imposed separately for each country in which we have oil and gas properties. An expense recorded in one period may not be reversed in a subsequent period even though higher oil and gas prices may have increased the ceiling applicable to the subsequent period. If, subsequent to the end of the quarter but prior to the applicable financial statements being published, prices increase to levels such that the ceiling would exceed the costs to be recovered, a writedown otherwise indicated at the end of the quarter is not required to be recorded. A writedown indicated at the end of a quarter is also not required if the value of additional reserves proved up on properties after the end of the quarter but prior to the publishing of the financial statements would result in the ceiling exceeding the costs to be recovered, as long as the properties were owned at the end of the quarter. Policy Description We periodically enter into derivative financial instruments with respect to a portion of our oil and gas production that hedge the future prices received. These instruments are used to manage the inherent uncertainty of future revenues due to oil and gas price volatility. Our derivative financial instruments include financial price swaps and costless price collars. Under the terms of the swaps, we will receive a fixed price for our production and pay a variable market price to the contract counterparty. The price collars set a floor and ceiling price for the hedged production. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, we will cash-settle the difference with the counterparty to the collars. We periodically enter into interest rate swaps to manage our exposure to interest rate volatility. We use these swaps to mitigate a portion of the fair value effects of interest rate fluctuations on our fixed-rate debt. Under the terms of these swaps, we receive a fixed rate and pay a variable rate on a total notional amount. All derivative financial instruments are recognized at their current fair value as either assets or liabilities in the balance sheet. Changes in the fair value of these derivative financial instruments are recorded in the statement of operations unless specific hedge accounting criteria are met. If such criteria are met for cash flow hedges, the effective portion of the change in the fair value is recorded directly to accumulated other comprehensive income, a component of stockholders’ equity, until the hedged transaction occurs. The ineffective portion of the change in fair value is recorded in the statement of operations. If such criteria are met for fair value hedges, the change in the fair value is recorded in the statement of operations with an offsetting amount recorded for the change in fair value of the hedged item. Cash settlements with counterparties to our derivative financial instruments also increase or decrease earnings at the time of the settlement. A derivative financial instrument qualifies for hedge accounting treatment if we designate the instrument as such on the date the derivative contract is entered into or the date of a business combination or other transaction that includes derivative contracts. Additionally, we must document the relationship between the
Table of Contentshedging instrument and hedged item, as well as the risk-management objective and strategy for undertaking the instrument. We must also assess, both at the instrument’s inception and on an ongoing basis, whether the derivative is highly effective in offsetting the change in cash flow of the hedged item. For derivative financial instruments held during 2008, 2007 and 2006, we chose not to meet the necessary criteria to qualify our derivative financial instruments for hedge accounting treatment. Policy Description We periodically enter into derivative financial instruments with respect to a portion of our oil and gas production that hedge the future prices received. These instruments are used to manage the inherent uncertainty of future revenues due to oil and gas price volatility. Our derivative financial instruments include financial price swaps and costless price collars. Under the terms of the swaps, we will receive a fixed price for our production and pay a variable market price to the contract counterparty. The price collars set a floor and ceiling price for the hedged production. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, we will cash-settle the difference with the counterparty to the collars. We periodically enter into interest rate swaps to manage our exposure to interest rate volatility. We use these swaps to mitigate a portion of the fair value effects of interest rate fluctuations on our fixed-rate debt. Under the terms of these swaps, we receive a fixed rate and pay a variable rate on a total notional amount. All derivative financial instruments are recognized at their current fair value as either assets or liabilities in the balance sheet. Changes in the fair value of these derivative financial instruments are recorded in the statement of operations unless specific hedge accounting criteria are met. If such criteria are met for cash flow hedges, the effective portion of the change in the fair value is recorded directly to accumulated other comprehensive income, a component of stockholders’ equity, until the hedged transaction occurs. The ineffective portion of the change in fair value is recorded in the statement of operations. If such criteria are met for fair value hedges, the change in the fair value is recorded in the statement of operations with an offsetting amount recorded for the change in fair value of the hedged item. Cash settlements with counterparties to our derivative financial instruments also increase or decrease earnings at the time of the settlement. A derivative financial instrument qualifies for hedge accounting treatment if we designate the instrument as such on the date the derivative contract is entered into or the date of a business combination or other transaction that includes derivative contracts. Additionally, we must document the relationship between the
Table of Contentshedging instrument and hedged item, as well as the risk-management objective and strategy for undertaking the instrument. We must also assess, both at the instrument’s inception and on an ongoing basis, whether the derivative is highly effective in offsetting the change in cash flow of the hedged item. For derivative financial instruments held during 2008, 2007 and 2006, we chose not to meet the necessary criteria to qualify our derivative financial instruments for hedge accounting treatment. Policy Description From our beginning as a public company in 1988 through 2003, we grew substantially through acquisitions of other oil and gas companies. Most of these acquisitions have been accounted for using the purchase method of accounting. Current accounting pronouncements require the purchase method to be used to account for any future acquisitions. Under the purchase method, the acquiring company adds to its balance sheet the estimated fair values of the acquired company’s assets and liabilities. Any excess of the purchase price over the fair values of the tangible and intangible net assets acquired is recorded as goodwill. Goodwill is assessed for impairment at least annually. Policy Description From our beginning as a public company in 1988 through 2003, we grew substantially through acquisitions of other oil and gas companies. Most of these acquisitions have been accounted for using the purchase method of accounting. Current accounting pronouncements require the purchase method to be used to account for any future acquisitions. Under the purchase method, the acquiring company adds to its balance sheet the estimated fair values of the acquired company’s assets and liabilities. Any excess of the purchase price over the fair values of the tangible and intangible net assets acquired is recorded as goodwill. Goodwill is assessed for impairment at least annually. Policy Description Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. The impairment test requires allocating goodwill and all other assets and liabilities to assigned reporting units. The fair value of each reporting unit is estimated and compared to the net book value of the reporting unit. If the estimated fair value of the reporting unit is less than the net book value, including goodwill, then the goodwill is written down to the implied fair value of the goodwill through a charge to expense. Policy Description Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. The impairment test requires allocating goodwill and all other assets and liabilities to assigned reporting units. The fair value of each reporting unit is estimated and compared to the net book value of the reporting unit. If the estimated fair value of the reporting unit is less than the net book value, including goodwill, then the goodwill is written down to the implied fair value of the goodwill through a charge to expense. These excerpts taken from the DVN 10-K filed Jun 9, 2008. Policy
Description
Goodwill is tested for impairment at least annually. This
requires us to estimate the fair values of our own assets and
liabilities in a manner similar to the process described above
for a business combination. Therefore, considerable judgment
similar to that described above in connection with estimating
the fair value of an acquired company in a business combination
is also required to assess goodwill for impairment.
Policy Description Goodwill is tested for impairment at least annually. This requires us to estimate the fair values of our own assets and liabilities in a manner similar to the process described above for a business combination. Therefore, considerable judgment similar to that described above in connection with estimating the fair value of an acquired company in a business combination is also required to assess goodwill for impairment. These excerpts taken from the DVN 10-K filed Feb 28, 2008. Policy
Description
Goodwill is tested for impairment at least annually. This
requires us to estimate the fair values of our own assets and
liabilities in a manner similar to the process described above
for a business combination. Therefore, considerable judgment
similar to that described above in connection with estimating
the fair value of an acquired company in a business combination
is also required to assess goodwill for impairment.
Policy Description Goodwill is tested for impairment at least annually. This requires us to estimate the fair values of our own assets and liabilities in a manner similar to the process described above for a business combination. Therefore, considerable judgment similar to that described above in connection with estimating the fair value of an acquired company in a business combination is also required to assess goodwill for impairment. This excerpt taken from the DVN 10-K filed Feb 28, 2007. Policy
Description
Goodwill is tested for impairment at least annually. This
requires us to estimate the fair values of our own assets and
liabilities in a manner similar to the process described above
for a business combination. Therefore, considerable judgment
similar to that described above in connection with estimating
the fair value of an acquired company in a business combination
is also required to assess goodwill for impairment.
| EXCERPTS ON THIS PAGE:
RELATED TOPICS for DVN: |
| |||||||
