Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

14. 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, 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 oil, natural-gas, and NGLs 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, items not related to the Company’s normal operations included Deepwater Horizon settlement and related costs, Tronox-related contingent loss, and certain other nonoperating items included in other (income) expense, net. 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	2015			2014
Income (loss) before income taxes	$	(4,628	)	$	(1,962	)
Exploration expense	1,083			299
DD&A	1,256			1,124
Impairments	2,783			3
Interest expense	216			183
Total (gains) losses on derivatives, net, less net cash from settlement of    commodity derivatives	243			363
Deepwater Horizon settlement and related costs	4			—
Tronox-related contingent loss	5			4,300
Certain other nonoperating items	22			—
Less net income attributable to noncontrolling interests	32			43
Consolidated Adjusted EBITDAX	$	952		$	4,267

14. Segment Information (Continued)

Information presented below as “Other and Intersegment Eliminations” includes corporate costs, results from hard-minerals royalties, and net cash from settlement of commodity derivatives. 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, 2015
Sales revenues	$	1,070		$	174		$	1,341		$	—		$	2,585
Intersegment revenues	1,117			302			(1,191		)	(228		)	—
Gains (losses) on divestitures and other, net	(338		)	—			—			74			(264		)
Total revenues and other	1,849			476			150			(154		)	2,321
Operating costs and expenses (1)	1,002			240			198			(37		)	1,403
Net cash from settlement of commodity derivatives	—			—			—			(90		)	(90		)
Other (income) expense, net (2)	—			—			—			25			25
Net income attributable to noncontrolling interests	—			32			—			—			32
Total expenses and other	1,002			272			198			(102		)	1,370
Total (gains) losses on derivatives, net    included in marketing revenue, less net    cash from settlement	—			—			1			—			1
Adjusted EBITDAX	$	847		$	204		$	(47	)	$	(52	)	$	952
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	—			—			—			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

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⁽¹⁾   Operating costs and expenses excludes exploration expense, DD&A, impairments, and Deepwater Horizon settlement and related costs since these expenses are excluded from Adjusted EBITDAX.

⁽²⁾   Other (income) expense, net excludes certain other nonoperating items since these items are excluded from Adjusted EBITDAX.