12. Debt and Interest Expense

Debt The Company’s outstanding debt is senior unsecured, except for borrowings, if any, under the $5.0 billion Facility. See Note 10—Equity-Method Investments for disclosure regarding Anadarko’s notes payable related to its ownership of certain noncontrolling mandatorily redeemable interests that are not included in the Company’s reported debt balance and do not affect consolidated interest expense. The following summarizes the Company’s outstanding debt:



	December 31,
millions	2014			2013
5.750% Senior Notes due 2014	$	—		$	275
7.625% Senior Notes due 2014	—			500
5.950% Senior Notes due 2016	1,750			1,750
6.375% Senior Notes due 2017	2,000			2,000
7.050% Debentures due 2018	114			114
WES 2.600% Senior Notes due 2018	350			250
6.950% Senior Notes due 2019	300			300
8.700% Senior Notes due 2019	600			600
WES 5.375% Senior Notes due 2021	500			500
WES 4.000% Senior Notes due 2022	670			670
3.450% Senior Notes due 2024	625			—
6.950% Senior Notes due 2024	650			650
7.500% Debentures due 2026	112			112
7.000% Debentures due 2027	54			54
7.125% Debentures due 2027	150			150
6.625% Debentures due 2028	17			17
7.150% Debentures due 2028	235			235
7.200% Debentures due 2029	135			135
7.950% Debentures due 2029	117			117
7.500% Senior Notes due 2031	900			900
7.875% Senior Notes due 2031	500			500
Zero-Coupon Senior Notes due 2036	2,360			2,360
6.450% Senior Notes due 2036	1,750			1,750
7.950% Senior Notes due 2039	325			325
6.200% Senior Notes due 2040	750			750
4.500% Senior Notes due 2044	625			—
WES 5.450% Senior Notes due 2044	400			—
7.730% Debentures due 2096	61			61
7.500% Debentures due 2096	78			78
7.250% Debentures due 2096	49			49
WES revolving credit facility	510			—
Total debt at face value	$	16,687		$	15,202
Net unamortized discounts and premiums ⁽¹⁾	(1,616		)	(1,645		)
Total borrowings	$	15,071		$	13,557
Capital lease obligation	21			8
Less current portion of long-term debt	—			500
Total long-term debt	$	15,092		$	13,065

__________________________________________________________________


⁽¹⁾	Unamortized discounts and premiums are amortized over the term of the related debt.

12. Debt and Interest Expense (Continued)

In a 2006 private offering, Anadarko received $500 million of loan proceeds upon issuing the Zero-Coupon Senior Notes due 2036 (Zero Coupons). The Zero Coupons mature in 2036 and have an aggregate principal amount due at maturity of approximately $2.4 billion, reflecting a yield to maturity of 5.24%. The Zero Coupons can be put to the Company in October of each year, in whole or in part, for the then-accreted value of the outstanding Zero Coupons. The accreted value of the outstanding Zero Coupons was $765 million at December 31, 2014. Anadarko’s Zero Coupons are classified as long-term debt on the Company’s Consolidated Balance Sheets, as the Company has the ability and intent to refinance these obligations using long-term debt.

Fair Value The Company uses a market approach to determine the fair value of its fixed-rate debt using observable market data, which results in a Level 2 fair-value measurement. The carrying amount of floating-rate debt approximates fair value as the interest rates are variable and reflective of market rates. The estimated fair value of the Company’s total borrowings was $17.4 billion at December 31, 2014, and $15.3 billion at December 31, 2013.

Debt Activity The following summarizes the Company’s debt activity during 2014 and 2013:



millions	Carrying Value			Description
Balance at December 31, 2012	$	13,269
Issuances	250			WES 2.600% Senior Notes due 2018
Borrowings	710			WES revolving credit facility
Repayments	(710		)	WES revolving credit facility
Other, net	38			Amortization of debt discounts and premiums
Balance at December 31, 2013	$	13,557
Issuances	101			WES 2.600% Senior Notes due 2018
	394			WES 5.450% Senior Notes due 2044
	624			3.450% Senior Notes due 2024
	621			4.500% Senior Notes due 2044
Borrowings	1,160			WES revolving credit facility
Repayments	(500		)	7.625% Senior Notes due 2014
	(275		)	5.750% Senior Notes due 2014
	(650		)	WES revolving credit facility
Other, net	39			Amortization of debt discounts and premiums
Balance at December 31, 2014	$	15,071

12. Debt and Interest Expense (Continued)

Anadarko Revolving Credit Facilities and Commercial Paper Program During 2014, the Company maintained the $5.0 billion Facility maturing in September 2015. Obligations incurred under the $5.0 billion Facility, as well as obligations Anadarko had to lenders or their affiliates pursuant to certain derivative instruments that were supported by the $5.0 billion Facility as discussed in Note 11—Derivative Instruments, were guaranteed by certain of the Company’s wholly owned domestic subsidiaries, and were secured by a perfected first-priority security interest in certain exploration and production assets located in the United States and 65% of the capital stock of certain wholly owned foreign subsidiaries. During 2014, the Company had no outstanding borrowings under the $5.0 billion Facility.

In June 2014, Anadarko entered into a $3.0 billion five-year senior unsecured revolving credit facility (Five-Year Facility), which is expandable to $4.0 billion, and a $2.0 billion 364-day senior unsecured revolving credit facility (364-Day Facility). The new facilities (collectively, the New Credit Facilities) replaced the $5.0 billion Facility upon satisfaction of certain conditions, including the January 2015 settlement payment related to the Tronox Adversary Proceeding. For additional information, see Note 17—Contingencies—Tronox Litigation.

In January 2015, the Company borrowed $1.5 billion under the 364-Day Facility. Borrowings under the New Credit Facilities generally bear interest under one of two rate options, at Anadarko’s election, using either LIBOR (or Euro Interbank Offered Rate in the case of borrowings under the Five-Year Facility denominated in Euro) or an alternate base rate, in each case plus an applicable margin ranging from 0.00% to 1.65% for the Five-Year Facility and 0.00% to 1.675% for the 364-Day Facility. The applicable margin will vary depending on Anadarko’s credit ratings.

The New Credit Facilities contain certain customary affirmative and negative covenants, including a financial covenant requiring maintenance of a consolidated indebtedness to total capitalization ratio of no greater than 65%, and limitations on certain secured indebtedness, sale-and-leaseback transactions, and mergers and other fundamental changes.

In January 2015, the Company initiated a commercial paper program, which allows a maximum of $3.0 billion of unsecured commercial paper notes. The maturities of the commercial paper notes vary, but may not exceed 397 days. The commercial paper notes are sold under customary terms in the commercial paper market and are issued either at a discounted price to their principal face value or will bear interest at varying interest rates on a fixed or floating basis. Such discounted price or interest amounts are dependent on market conditions and the ratings assigned to the commercial paper program by credit rating agencies at the time of issuance of the commercial paper notes.

WES Borrowings In February 2014, WES amended and restated its then-existing $800 million senior unsecured revolving credit facility by entering into a five-year, $1.2 billion senior unsecured revolving credit facility maturing in February 2019 (RCF), which is expandable to a maximum of $1.5 billion. Borrowings under the RCF bear interest at LIBOR plus an applicable margin ranging from 0.975% to 1.45% depending on WES’s credit rating, or the greatest of (i) rates at a margin above the one-month LIBOR, (ii) the federal funds rate, or (iii) prime rates offered by certain designated banks. At December 31, 2014, WES was in compliance with all covenants contained in its RCF, had outstanding borrowings under its RCF of $510 million at an interest rate of 1.47%, and had available borrowing capacity of approximately $677 million ($1.2 billion capacity, less $510 million of outstanding borrowings and $13 million of outstanding letters of credit).

12. Debt and Interest Expense (Continued)

Scheduled Maturities Total principal amount of debt maturities for the five years ending December 31, 2019, excluding the potential repayment of the outstanding Zero Coupons that may be put by the holder to the Company annually, were as follows:



millions	Principal Amount of Debt Maturities
2015	$	—
2016	1,750
2017	2,000
2018	464
2019	1,410

Interest Expense The following summarizes interest expense for the years ended December 31:



millions	2014			2013			2012
Debt and other	$	973		$	949		$	963
Capitalized interest	(201		)	(263		)	(221		)
Total interest expense	$	772		$	686		$	742