Chevron 2012 Annual Report Download - page 70
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Properties were measured primarily using an income
approach. e fair values of the acquired oil and gas proper-
ties were based on signicant inputs not observable in the
market and thus represent Level 3 measurements. Refer
to Note 8, beginning on page 41 for a denition of fair
value hierarchy levels. Signicant inputs included estimated
resource volumes, assumed future production proles, esti-
mated future commodity prices, a discount rate of 8 percent,
and assumptions on the timing and amount of future oper-
ating and development costs. All the properties are in the
United States and are included in the Upstream segment.
e acquisition date fair value of the consideration trans-
ferred was $3,400 in cash. e $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. Good-
will represents the future economic benets arising from
other assets acquired that could not be individually identied
and separately recognized. None of the goodwill is deduct-
ible 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 stan-
dard (ASC 350).
Note 26
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 Pennsylva-
nia. e 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 o 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 per-
cent of Chevron’s drilling costs, up to $1,300.
e acquisition was accounted for as a business combina-
tion (ASC 805) which, among other things, requires assets
acquired and liabilities assumed to be measured at their
acquisition date fair values. Provisional fair value measure-
ments were made in rst quarter 2011 for acquired assets and
assumed liabilities, and the measurement process was nal-
ized in fourth quarter 2011.
Proforma nancial information is not presented, as it
would not be materially dierent from the information pre-
sented in the Consolidated Statement of Income.
e 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
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
68 Chevron Corporation 2012 Annual Report