Segment Information

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Information

15. 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   June 30,					Six Months Ended   June 30,
millions	2015			2014		2015			2014
Income (loss) before income taxes	$	185		$	694	$	(4,443	)	$	(1,268	)
Exploration expense	103			502		1,186			801
DD&A	1,214			1,048		2,470			2,172
Impairments	30			117		2,813			120
Interest expense	201			186		417			369
Total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives	(229		)	237		14			600
Deepwater Horizon settlement and related costs	—			93		4			93
Tronox-related contingent loss	—			19		5			4,319
Certain other nonoperating items	—			—		22			—
Less net income attributable to noncontrolling interests	47			39		79			82
Consolidated Adjusted EBITDAX	$	1,457		$	2,857	$	2,409		$	7,124

15. 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 June 30, 2015
Sales revenues	$	1,356		$	191		$	1,090		$	—		$	2,637
Intersegment revenues	885			303			(954		)	(234		)	—
Gains (losses) on divestitures and other, net	(95		)	3			—			91			(1		)
Total revenues and other	2,146			497			136			(143		)	2,636
Operating costs and expenses (1)	832			234			192			(59		)	1,199
Net cash from settlement of commodity derivatives	—			—			—			(82		)	(82		)
Other (income) expense, net (2)	—			—			—			15			15
Net income attributable to noncontrolling interests	—			47			—			—			47
Total expenses and other	832			281			192			(126		)	1,179
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—			—			—			—			—
Adjusted EBITDAX	$	1,314		$	216		$	(56	)	$	(17	)	$	1,457
Three Months Ended June 30, 2014
Sales revenues	$	2,223		$	119		$	2,043		$	—		$	4,385
Intersegment revenues	1,790			326			(1,906		)	(210		)	—
Gains (losses) on divestitures and other, net	10			(1		)	—			45			54
Total revenues and other	4,023			444			137			(165		)	4,439
Operating costs and expenses (1)	1,026			251			186			7			1,470
Net cash from settlement of commodity derivatives	—			—			—			88			88
Other (income) expense, net (2)	—			—			—			(13		)	(13		)
Net income attributable to noncontrolling interests	—			39			—			—			39
Total expenses and other	1,026			290			186			82			1,584
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—			—			2			—			2
Adjusted EBITDAX	$	2,997		$	154		$	(47	)	$	(247	)	$	2,857

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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.

15. Segment Information (Continued)

millions	Oil and Gas Exploration & Production			Midstream			Marketing			Other and Intersegment Eliminations			Total
Six Months Ended June 30, 2015
Sales revenues	$	2,426		$	365		$	2,431		$	—		$	5,222
Intersegment revenues	2,002			605			(2,145		)	(462		)	—
Gains (losses) on divestitures and other, net	(433		)	3			—			165			(265		)
Total revenues and other	3,995			973			286			(297		)	4,957
Operating costs and expenses (1)	1,834			474			390			(96		)	2,602
Net cash from settlement of commodity derivatives	—			—			—			(172		)	(172		)
Other (income) expense, net (2)	—			—			—			40			40
Net income attributable to noncontrolling interests	—			79			—			—			79
Total expenses and other	1,834			553			390			(228		)	2,549
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—			—			1			—			1
Adjusted EBITDAX	$	2,161		$	420		$	(103	)	$	(69	)	$	2,409
Six Months Ended June 30, 2014
Sales revenues	$	4,612		$	239		$	3,872		$	—		$	8,723
Intersegment revenues	3,343			646			(3,595		)	(394		)	—
Gains (losses) on divestitures and other, net	1,470			(3		)	—			93			1,560
Total revenues and other	9,425			882			277			(301		)	10,283
Operating costs and expenses (1)	2,038			483			367			25			2,913
Net cash from settlement of commodity derivatives	—			—			—			180			180
Other (income) expense, net (2)	—			—			—			(12		)	(12		)
Net income attributable to noncontrolling interests	—			82			—			—			82
Total expenses and other	2,038			565			367			193			3,163
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—			—			4			—			4
Adjusted EBITDAX	$	7,387		$	317		$	(86	)	$	(494	)	$	7,124

 __________________________________________________________________

⁽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.