REVENUE
Revenue from customers is recognized when obligations under the terms of a contract are satisfied.
Sales of our Produced Oil, Natural Gas and NGLs
Revenue from sales of our oil, natural gas and NGL production is recognized upon delivery (and transfer of control) of the commodity to the customer. In certain instances, transportation and processing fees are incurred by us prior to delivery to customers. We record these transportation and processing fees as transportation costs on our consolidated statements of operations.
Our contracts with customers are generally less than a year and based on index prices. We recognize revenue in the amount that we expect to receive once we are able to adequately estimate the consideration (i.e., when market prices are known). Our contracts with customers typically require payment within 30 days following the month of delivery. The following table provides disaggregated revenue for sales of produced oil, natural gas and NGLs to external customers:
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| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
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| (in millions) |
| Oil | $ | 2,255 | | | $ | 1,534 | | | $ | 1,968 | |
| NGLs | 186 | | | 198 | | | 264 | |
| Natural gas | 96 | | | 309 | | | 258 | |
Sales to external customers | $ | 2,537 | | | $ | 2,041 | | | $ | 2,490 | |
We also process third-party wet gas at one of our gas processing facilities, which is sold to customers. We recognized $3 million, $15 million and $14 million included in other revenue on our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, respectively.
Electricity Sales
The electrical output of our Elk Hills power plant that is not used in our operations is primarily sold into the California Independent System Operator (CAISO) wholesale power market. We also sold power not used in our operations to a utility under a power purchase and sales agreement (PPA) that terminated in December 2023, which included a monthly capacity payment plus a variable payment based on the quantity of power purchased each month. Revenue is recognized when obligations under the terms of a contract are satisfied; generally, this occurs upon delivery of the electricity. Revenue is measured as the amount of consideration we expect to receive based on CAISO market pricing with payment due the month following delivery. We recognize revenue using the output method and consider our performance obligations to be satisfied upon delivery of electricity or as the contracted amount of capacity is made available to the customer in the case of capacity payments.
Revenue from Marketing of Purchased Commodities
From time-to-time, we enter into transactions for third-party production, which we report as revenue from marketing of purchased commodities on our condensed consolidated statements of operations. Revenues from marketing of purchased commodities results from (1) the storage or transportation of natural gas to take advantage of differences in pricing or location, (2) marketing oil sales that have resulted from third-party purchases or (3) sales of NGLs from inventory storage. To transport our natural gas as well as third-party volumes, we have entered into firm pipeline commitments. We report associated expense related to our marketing of purchased commodities in total operating expenses on our consolidated statements of operations. We consider our performance obligations to be satisfied upon transfer of control of the commodity.
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| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
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| (in millions) |
| Oil | $ | 99 | | | $ | — | | | $ | 1 | |
| Natural gas | 128 | | | 401 | | | 314 | |
| NGLs | 8 | | | 6 | | | 16 | |
Revenue from marketing of purchased commodities | $ | 235 | | | $ | 407 | | | $ | 331 | |
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About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.