Segment Information

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Segment Information

19. 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 oil, condensate, natural gas, 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, condensate, 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; gains (losses) on divestitures, net; 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 (loss) attributable to noncontrolling interests. During the periods presented, items not related to the Company’s normal operations included restructuring charges related to the workforce reduction program included in general and administrative expenses, other operating expenses such as 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 gains (losses) on divestitures, net and exploration expense as they are not indicators 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 (loss) 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	2016			2015
Income (loss) before income taxes	$	(1,381	)	$	(4,628	)
(Gains) losses on divestitures, net	(2		)	334
Exploration expense	126			1,083
DD&A	1,149			1,256
Impairments	16			2,783
Interest expense	220			216
Total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives	404			243
Restructuring charges	203			—
Other operating expense	1			4
Tronox-related contingent loss	—			5
Certain other nonoperating items	—			22
Less net income (loss) attributable to noncontrolling interests	36			32
Consolidated Adjusted EBITDAX	$	700		$	1,286

19. 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, 2016
Sales revenues	$	711	$	125	$	798		$	—		$	1,634
Intersegment revenues	601		302		(663		)	(240		)	—
Other	—		—		—			38			38
Total revenues and other (1)	1,312		427		135			(202		)	1,672
Operating costs and expenses (2)	773		183		176			(89		)	1,043
Net cash from settlement of commodity derivatives	—		—		—			(103		)	(103		)
Other (income) expense, net	—		—		—			—			—
Net income (loss) attributable to noncontrolling interests	—		36		—			—			36
Total expenses and other	773		219		176			(192		)	976
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—		—		4			—			4
Adjusted EBITDAX	$	539	$	208	$	(37	)	$	(10	)	$	700
Three Months Ended March 31, 2015
Sales revenues	$	1,070	$	174	$	1,341		$	—		$	2,585
Intersegment revenues	1,117		302		(1,191		)	(228		)	—
Other	—		—		—			70			70
Total revenues and other (1)	2,187		476		150			(158		)	2,655
Operating costs and expenses (2)	1,002		240		198			(37		)	1,403
Net cash from settlement of commodity derivatives	—		—		—			(90		)	(90		)
Other (income) expense, net (3)	—		—		—			25			25
Net income (loss) 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	$	1,185	$	204	$	(47	)	$	(56	)	$	1,286

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⁽¹⁾  Total revenues and other excludes gains (losses) on divestitures, net since these gains and losses are excluded from Adjusted EBITDAX.

⁽²⁾  Operating costs and expenses excludes exploration expense, DD&A, impairments, restructuring charges, and other operating expense since these expenses are excluded from Adjusted EBITDAX.

⁽³⁾  Other (income) expense, net excludes certain other nonoperating items since these items are excluded from Adjusted EBITDAX.