Note 5. Debt

Our debt consists of the following:

	September 30,						December 31,
	2011						2010
	Debt			Interest Rate			Debt			Interest Rate
(millions, except percentages)
Credit Facility, due December 9, 2012	$	400			0.56	%	$	350			0.57	%
CONSOL Installment Payments, due September 30, 2012 and 2013		656			1.76	%		-			-
FPSO Lease Obligation		351			-			295			-
5¼% Senior Notes, due April 15, 2014		200			5.25	%		200			5.25	%
8¼% Senior Notes, due March 1, 2019		1,000			8.25	%		1,000			8.25	%
7¼% Notes, due October 15, 2023		100			7.25	%		100			7.25	%
8% Senior Notes, due April 1, 2027		250			8.00	%		250			8.00	%
6% Senior Notes, due March 1, 2041		850			6.00	%		-			-
7¼% Senior Debentures, due August 1, 2097		84			7.25	%		84			7.25	%
Total		3,891						2,279
Unamortized Discount		(29	)					(7	)
Total Debt, Net of Discount		3,862						2,272
Less Amounts Due Within One Year
CONSOL Installment Payment, due September 30, 2012, net of discount		(322	)					-
FPSO Lease Obligation		(33	)					-
Long-Term Debt Due After One Year	$	3,507					$	2,272

CONSOL Installment Payments On September 30, 2011, we closed an agreement with CONSOL for the development of Marcellus shale properties. In addition to the cash paid at closing, we agreed to make two installment payments of $328 million each on September 30, 2012 and 2013. The installment payments have been discounted at the prevailing market rates for similar debt instruments. The CONSOL installment loan is a non-cash financing activity. See Note 3. Acquisitions and Divestitures and Note 7. Fair Value Measurements and Disclosures.

FPSO Lease Obligation We have entered into an agreement to lease a floating production, storage and offloading vessel (FPSO) to be used in the development of the Aseng field, offshore Equatorial Guinea. The amount of the FPSO lease obligation is based on the discounted present value of future minimum lease payments and the percentage of construction activities completed as of the reporting dates, and therefore does not reflect future minimum lease payments. The increase in the FPSO lease obligation is a non-cash financing activity. Amounts due within one year equal the amount by which the FPSO lease obligation is expected to be reduced during the next 12 months as lease payments begin. We currently expect production to commence, and lease payments to begin, by year end 2011.

Issuance of 6% Senior Notes On February 18, 2011, we closed an offering of $850 million senior unsecured notes receiving net proceeds of $836 million, after deducting discount and underwriting fees. The notes are due March 1, 2041, and pay interest semi-annually at 6%. Total debt issuance costs of approximately $9 million were incurred and are being amortized to expense over the term of the notes. Approximately $470 million of the net proceeds were used to repay outstanding indebtedness under our revolving credit facility and the balance of the proceeds will be used for general corporate purposes. The notes are senior unsecured debt and rank pari passu with any of our other senior unsecured indebtedness with respect to the payment of both principal and interest. See Note 6. Derivative Instruments and Hedging Activities – Interest Rate Derivative Instrument.

Annual Debt Maturities and FPSO Lease Payments Annual maturities of outstanding debt and estimated annual FPSO lease payments are as follows:

	Debt Principal Payments		FPSO Lease Payments
(millions)
September 30, 2011
2011	$	-	$	12
2012		728		72
2013		328		72
2014		200		72
2015		-		70
Thereafter		2,284		198
Total	$	3,540	$	496

New Credit Facility On October 14, 2011, we entered into a credit agreement with certain commercial lending institutions (the Credit Agreement) which provides for a new $3.0 billion unsecured five-year revolving credit facility (the New Credit Facility). The New Credit Facility replaces our $2.1 billion credit facility maturing December 9, 2012. Also on October 14, 2011, we borrowed $400 million under the New Credit Facility, which was used to repay outstanding borrowings under and to terminate the $2.1 billion credit facility.

The New Credit Facility (i) provides for an initial commitment of $3.0 billion with an option to increase the overall commitment amount by up to an additional $1.0 billion, subject to the consent of any increasing lenders, (ii) will mature on October 14, 2016, (iii) provides for facility fee rates that range from 12.5 basis points to 30 basis points per year depending upon our credit rating, (iv) includes sub-facilities for short-term loans and letters of credit up to an aggregate amount of $500 million under each sub-facility and (iv) provides for interest rates that are based upon the Eurodollar rate plus a margin that ranges from 100 basis points to 145 basis points depending upon our credit rating.

The Credit Agreement requires that our total debt to capitalization ratio (as defined in the Credit Agreement), expressed as a percentage, not exceed 65% at any time. A violation of this covenant could result in a default under the Credit Agreement, which would permit the participating banks to restrict our ability to access the New Credit Facility and require the immediate repayment of any outstanding advances under the New Credit Facility. The Credit Agreement does not restrict the payment of dividends on our common stock, except, if after giving effect thereto, an Event of Default shall have occurred and be continuing or been caused thereby.

The New Credit Facility is available for general corporate purposes. Certain lenders that are a party to the Credit Agreement have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending or commercial banking services for us for which they have received, and may in the future receive, customary compensation and reimbursement of expenses.