Segment Information

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Segment Information

13. Segment Information

Anadarko’s business segments are separately managed due to distinct operational differences and unique technology, distribution, and marketing requirements. The Company’s three reporting segments are oil and gas exploration and production, midstream, and marketing. The oil and gas exploration and production segment explores for and produces natural gas, crude oil, condensate, and NGLs, and plans for the development and operation of the Company’s LNG project in Mozambique. The midstream segment engages in gathering, processing, treating, and transporting Anadarko and third-party oil, natural-gas, and NGLs production. The midstream reporting segment consists of two operating segments, WES and other midstream, which are aggregated into one reporting segment due to similar financial and operating characteristics. The marketing segment sells much of Anadarko’s production, as well as third-party purchased volumes.

To assess the performance of Anadarko’s operating segments, the chief operating decision maker analyzes Adjusted EBITDAX. The Company defines Adjusted EBITDAX as income (loss) before income taxes; exploration expense; depreciation, depletion, and amortization (DD&A); impairments; interest expense; total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives; and certain items not related to the Company’s normal operations, less net income attributable to noncontrolling interests. During the periods presented, certain items not related to the Company’s normal operations included Algeria exceptional profits tax settlement and Tronox-related contingent loss. The Company’s definition of Adjusted EBITDAX excludes exploration expense, as it is not an indicator of operating efficiency for a given reporting period. However, exploration expense is monitored by management as part of costs incurred in exploration and development activities. Similarly, DD&A and impairments are excluded from Adjusted EBITDAX as a measure of segment operating performance because capital expenditures are evaluated at the time capital costs are incurred. Adjusted EBITDAX also excludes interest expense to allow for assessment of segment operating results without regard to Anadarko’s financing methods or capital structure. Total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives are excluded from Adjusted EBITDAX because these (gains) losses are not considered a measure of asset operating performance. Finally, net income attributable to noncontrolling interests is excluded from the Company’s measure of Adjusted EBITDAX because it represents earnings that are not attributable to the Company’s common stockholders.

Management believes that the presentation of Adjusted EBITDAX provides information useful in assessing the Company’s financial condition and results of operations and that Adjusted EBITDAX is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures, and make distributions to stockholders. Adjusted EBITDAX as defined by Anadarko may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) attributable to common stockholders and other performance measures, such as operating income or cash flows from operating activities. Below is a reconciliation of consolidated Adjusted EBITDAX to income (loss) before income taxes:

	Three Months Ended   March 31,
millions	2014			2013
Income (loss) before income taxes	$	(1,962	)	$	940
Exploration expense	299			264
DD&A	1,124			1,022
Impairments	3			29
Interest expense	183			164
Total (gains) losses on derivatives, net, less net cash from settlement of    commodity derivatives	363			246
Algeria exceptional profits tax settlement	—			33
Tronox-related contingent loss	4,300			—
Less net income attributable to noncontrolling interests	43			24
Consolidated Adjusted EBITDAX	$	4,267		$	2,674

13. Segment Information (Continued)

Information presented below as “Other and Intersegment Eliminations” includes results from hard-minerals royalty arrangements and corporate, financing, and certain derivative activities. The following summarizes selected financial information for Anadarko’s reporting segments:

millions	Oil and Gas Exploration & Production		Midstream			Marketing			Other and Intersegment Eliminations			Total
Three Months Ended March 31, 2014
Sales revenues	$	2,389	$	120		$	1,829		$	—		$	4,338
Intersegment revenues	1,553		320			(1,689		)	(184		)	—
Gains (losses) on divestitures and other, net	1,460		(2		)	—			48			1,506
Total revenues and other	5,402		438			140			(136		)	5,844
Operating costs and expenses (1)	1,012		232			181			18			1,443
Net cash from settlement of commodity derivatives	—		—			—			92			92
Other (income) expense, net (2)	—		—			—			1			1
Net income attributable to noncontrolling interests	—		43			—			—			43
Total expenses and other	1,012		275			181			111			1,579
Total (gains) losses on derivatives, net    included in marketing revenue, less net    cash from settlement	—		—			2			—			2
Adjusted EBITDAX	$	4,390	$	163		$	(39	)	$	(247	)	$	4,267
Three Months Ended March 31, 2013
Sales revenues	$	1,541	$	84		$	2,093		$	—		$	3,718
Intersegment revenues	1,862		253			(1,966		)	(149		)	—
Gains (losses) on divestitures and other, net	4		—			—			171			175
Total revenues and other	3,407		337			127			22			3,893
Operating costs and expenses (1)	884		188			164			20			1,256
Net cash from settlement of commodity    derivatives	—		—			—			(51		)	(51		)
Other (income) expense, net	—		—			—			(6		)	(6		)
Net income attributable to noncontrolling interests	—		24			—			—			24
Total expenses and other	884		212			164			(37		)	1,223
Total (gains) losses on derivatives, net    included in marketing revenue, less net    cash from settlement	—		—			4			—			4
Adjusted EBITDAX	$	2,523	$	125		$	(33	)	$	59		$	2,674

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⁽¹⁾   Operating costs and expenses excludes exploration expense, DD&A, impairments, and Algeria exceptional profits tax settlement since these expenses are excluded from Adjusted EBITDAX.

⁽²⁾   Other (income) expense, net excludes Tronox-related contingent loss since this expense is excluded from Adjusted EBITDAX.