Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

17. 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, 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, natural-gas, and NGLs production as well as gathering and disposal of produced water. 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; interest expense; DD&A; exploration expense; gains (losses) on divestitures, net; impairments; 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, restructuring charges related to the workforce reduction program included in G&A did not relate to the Company’s normal operations.

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 Adjusted EBITDAX provides information useful in assessing the Company’s operating and financial performance across periods. 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. Below is a reconciliation of consolidated Adjusted EBITDAX to income (loss) before income taxes:

	Three Months Ended   March 31,
millions	2017			2016
Income (loss) before income taxes	$	(178	)	$	(1,381	)
Interest expense	223			220
DD&A	1,115			1,149
Exploration expense	1,085			126
(Gains) losses on divestitures, net	(804		)	(2		)
Impairments	373			16
Total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives	(155		)	404
Restructuring charges	(1		)	203
Other operating expense	—			1
Less net income (loss) attributable to noncontrolling interests	43			36
Consolidated Adjusted EBITDAX	$	1,615		$	700

17. Segment Information (Continued)

Information presented below as “Other and Intersegment Eliminations” includes corporate costs, results from hard-minerals royalties, net cash from settlement of commodity derivatives, and net income (loss) attributable to noncontrolling interests. 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, 2017
Sales revenues	$	1,524		$	225	$	1,149		$	—		$	2,898
Intersegment revenues	871			361		(1,024		)	(208		)	—
Other (1)	2			33		6			24			65
Total revenues and other (2)	2,397			619		131			(184		)	2,963
Operating costs and expenses (3)	866			317		165			(43		)	1,305
Net cash from settlement of commodity derivatives	—			—		—			6			6
Other (income) expense, net	—			—		—			(8		)	(8		)
Net income (loss) attributable to noncontrolling interests (1)	—			—		—			43			43
Total expenses and other	866			317		165			(2		)	1,346
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—			—		(2		)	—			(2		)
Adjusted EBITDAX	$	1,531		$	302	$	(36	)	$	(182	)	$	1,615
Three Months Ended March 31, 2016
Sales revenues	$	711		$	125	$	798		$	—		$	1,634
Intersegment revenues	601			302		(663		)	(240		)	—
Other (1)	(1		)	13		1			25			38
Total revenues and other (2)	1,311			440		136			(215		)	1,672
Operating costs and expenses (3)	773			183		176			(89		)	1,043
Net cash from settlement of commodity derivatives	—			—		—			(103		)	(103		)
Net income (loss) attributable to noncontrolling interests	—			—		—			36			36
Total expenses and other	773			183		176			(156		)	976
Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement	—			—		4			—			4
Adjusted EBITDAX	$	538		$	257	$	(36	)	$	(59	)	$	700

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⁽¹⁾  Presentation has been adjusted to align with the current analysis of segment performance. Net income (loss) attributable to noncontrolling interests, previously reported within the Midstream segment, is now presented within Other and Intersegment Eliminations. Other revenues, previously reported within Other and Intersegment Eliminations, is now presented within the applicable segments.

⁽²⁾  Total revenues and other excludes gains (losses) on divestitures, net since these gains and losses are excluded from Adjusted EBITDAX.

⁽³⁾  Operating costs and expenses excludes exploration expense, DD&A, impairments, restructuring charges, and certain other operating expenses since these expenses are excluded from Adjusted EBITDAX.