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Non Mineral Leases
 12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Non-Mineral Leases
Note 17—Non-Mineral Leases
 
 
The company primarily leases office buildings and drilling
 
equipment, as well as ocean transport vessels,
tugboats, corporate aircraft, and other facilities
 
and equipment.
 
Certain leases include escalation clauses for
adjusting rental payments to reflect changes in price
 
indices and other leases include payment provisions
 
that
vary based on the nature of usage of the leased
 
asset.
 
Additionally, the company has executed certain leases
that provide it with the option to extend or renew
 
the term of the lease, terminate the lease
 
prior to the end of
the lease term, or purchase the leased asset as
 
of the end of the lease term.
 
In other cases, the company has
executed lease agreements that require it to
 
guarantee the residual value of certain leased office buildings.
 
For
additional information about guarantees, see
 
Note 12—Guarantees.
 
There are no significant restrictions
imposed on us by the lease agreements with regard
 
to dividends, asset dispositions or borrowing
 
ability.
 
Certain arrangements may contain both lease and
 
non-lease components and we determine
 
if an arrangement is
or contains a lease at contract inception.
 
Only the lease components of these contractual
 
arrangements are
subject to the provisions of ASC Topic 842, and any non-lease components are subject
 
to other applicable
accounting guidance; however,
we have elected to adopt the optional practical expedient not to separate lease
components apart from non-lease components for accounting purposes.
 
This policy election has been adopted
for each of the company’s leased asset classes existing as of the effective date and
 
subject to the transition
provisions of ASC Topic 842 and will be applied to all new or modified leases
 
executed on or after January 1,
2019.
 
For contractual arrangements executed in subsequent
 
periods involving a new leased asset class, the
company will determine at contract inception
 
whether it will apply the optional practical
 
expedient to the new
leased asset class.
 
 
Leases are evaluated for classification as operating
 
or finance leases at the commencement date of the
 
lease
and right-of-use assets and corresponding liabilities
 
are recognized on our consolidated balance sheet
 
based on
the present value of future lease payments relating
 
to the use of the underlying asset during the
 
lease term.
 
Future lease payments include variable lease payments
 
that depend upon an index or rate using
 
the index or
rate at the commencement date and probable
 
amounts owed under residual value guarantees.
 
The amount of
future lease payments may be increased to include
 
additional payments related to lease extension, termination,
and/or purchase options when the company has
 
determined, at or subsequent to lease commencement,
generally due to limited asset availability
 
or operating commitments, it is reasonably
 
certain of exercising such
options.
 
We use our incremental borrowing rate as the discount rate in determining the
 
present value of future
lease payments, unless the interest rate
 
implicit in the lease arrangement is readily determinable.
 
Lease
payments that vary subsequent to the commencement
 
date based on future usage levels, the nature
 
of leased
asset activities, or certain other contingencies are
 
not included in the measurement of lease
 
right-of-use assets
and corresponding liabilities.
 
We have elected not to record assets and liabilities on our consolidated balance
sheet for lease arrangements with terms of 12 months
 
or less.
 
 
We often enter into leasing arrangements acting in the capacity as operator for and/or
 
on behalf of certain oil
and gas joint ventures of undivided interests.
 
If the lease arrangement can be legally enforced only
 
against us
as operator and there is no separate arrangement to
 
sublease the underlying leased asset
 
to our coventurers, we
recognize at lease commencement a right-of-use
 
asset and corresponding lease liability on our
 
consolidated
balance sheet on a gross basis.
 
While we record lease costs on a gross basis in
 
our consolidated income
statement and statement of cash flows, such costs
 
are offset by the reimbursement we receive from our
coventurers for their share of the lease cost as the underlying
 
leased asset is utilized in joint venture activities.
 
As a result, lease cost is presented in our consolidated
 
income statement and statement of cash flows
 
on a
proportional basis.
 
If we are a nonoperating coventurer, we recognize a right-of-use
 
asset and corresponding
lease liability only if we were a specified contractual
 
party to the lease arrangement and the arrangement
 
could
be legally enforced against us.
 
In this circumstance, we would recognize both
 
the right-of-use asset and
corresponding lease liability on our consolidated
 
balance sheet on a proportional basis
 
consistent with our
undivided interest ownership in the related joint
 
venture.
 
 
The company has historically recorded certain
 
finance leases executed by investee companies
 
accounted for
under the proportionate consolidation method of
 
accounting on its consolidated balance sheet
 
on a proportional
basis consistent with its ownership interest
 
in the investee company.
 
In addition, the company has historically
recorded finance lease assets and liabilities
 
associated with certain oil and gas joint ventures
 
on a proportional
basis pursuant to accounting guidance applicable
 
prior to January 1, 2019.
 
As of December 31, 2018, $
420
million of finance lease assets (net of accumulated
 
DD&A) and $
688
 
million of finance lease liabilities were
recorded on our consolidated balance sheet
 
associated with these leases.
 
In accordance with the transition
provisions of ASC Topic 842, and since we have elected to adopt the package
 
of optional transition-related
practical expedients, the historical accounting treatment
 
for these leases has been carried forward
 
and is subject
to reconsideration upon the modification or
 
other required reassessment of the arrangements
 
prior to lease term
expiration.
 
 
In connection with our adoption of ASC Topic 842, we have recorded on our
 
consolidated balance sheet $
57
million of operating leases executed by investee
 
companies accounted for under the proportionate
consolidation method of accounting on a proportional
 
basis consistent with our ownership interest
 
in the
investee company.
The following tables summarize the finance leases
 
amounts that were reflected on our consolidated
 
balance
sheet as of December 31, 2018, the operating
 
leases impact of adopting ASC Topic 842, and the right-of-use
asset and lease liability balances reflected for both
 
operating and finance leases on our consolidated
 
balance
sheet as of December 31, 2019:
Millions of Dollars
* Includes proportionately consolidated finance lease assets (net of
 
accumulated depreciation, depletion and amortization) of $
335
 
million.
 
Millions of Dollars
Short-term debt and long-term debt include proportionately consolidated finance
 
lease liabilities of $
56
 
million and $
579
 
million, respectively.
 
The following table summarizes our lease costs
 
for 2019:
Millions of Dollars
2019
Lease Cost
*
Operating lease cost
$
341
Finance lease cost
Amortization of right-of-use assets
99
Interest on lease liabilities
37
Short-term lease cost
**
77
Total lease cost
***
$
554
 
*The amounts presented in the table above have not been adjusted to reflect amounts recovered or reimbursed from oil and gas coventurers.
 
**Short-term leases are not recorded on our consolidated balance sheet.
 
Our future short-term lease commitments amount to $
31
 
million, of
 
which $
18
 
million is related to leases whose terms have not yet commenced
 
as of December 31, 2019.
***Variable lease cost and sublease income are immaterial for the period presented and therefore are not included in the table above.
The following table summarizes the lease terms
 
and discount rates:
December 31, 2019
Lease Term and Discount Rate
Weighted-average term (years)
Operating leases
5.19
Finance leases
8.70
Weighted-average discount rate (percent)
Operating leases
3.10
Finance leases
5.53
The following table summarizes other lease information
 
for 2019:
Millions of Dollars
2019
Other Information
*
Cash paid for amounts included in the measurement
 
of lease liabilities
Operating cash flows from operating leases
$
203
Operating cash flows from finance leases
27
Financing cash flows from finance leases
81
Right-of-use assets obtained in exchange for
 
operating lease liabilities
$
499
Right-of-use assets obtained in exchange for
 
finance lease liabilities
26
*The amounts presented in the table above have not been adjusted to reflect amounts recovered or reimbursed from oil and gas coventurers.
 
In
addition,
 
pursuant to other applicable accounting guidance, lease payments
 
made in connection with preparing another asset for its intended use
are reported in the "Cash Flows From Investing Activities" section of our consolidated statement of cash flows.
 
The following table summarizes future lease
 
payments for operating and finance leases
 
at December 31, 2019:
Millions of Dollars
Operating
Leases
Finance
 
Leases
Maturity of Lease Liabilities
2020
$
348
120
2021
247
104
2022
130
102
2023
82
88
2024
63
84
Remaining years
149
382
Total
*
1,019
880
Less: portion representing imputed interest
(87)
(160)
Total lease liabilities
$
932
720
*Future lease payments for operating and finance leases commencing on
 
or after January 1, 2019, also include payments related to non-lease
components in accordance with our election to adopt the optional practical
 
expedient not to separate lease components apart from non-lease
components for accounting purposes.
 
In addition, future payments related to operating and finance leases proportionately consolidated by the
company have been included in the table on a proportionate basis consistent
 
with our respective ownership interest in the underlying investee
company or oil and gas venture.
At December 31, 2018, future minimum payments
 
due under finance (capital) leases pursuant
 
to
ASC Topic 840 were:
Millions
of Dollars
2019
$
118
2020
116
2021
100
2022
98
2023
87
Remaining years
453
Total
972
Less: portion representing imputed interest
(195)
Capital lease obligations
$
777
At December 31, 2018, future undiscounted minimum
 
rental payments due under noncancelable operating
leases pursuant to ASC Topic 840 were:
Millions
of Dollars
2019
$
248
2020
425
2021
136
2022
319
2023
54
Remaining years
212
Total
1,394
Less: income from subleases
(7)
Net minimum operating lease payments
$
1,387
For the years ended December 31, operating
 
lease rental expense pursuant to ASC Topic 840 was:
Millions of Dollars
2018
2017
Total rentals
$
253
264
Less: sublease rentals
(16)
(20)
$
237
244