Income Taxes

12 Months Ended

Dec. 31, 2012

Disclosure Text Block [Abstract]

Income Taxes

19.  Income Taxes

Components of income tax expense (benefit) were as follows:

		Years Ended December 31,
millions		2012		2011		2010
Current
	Federal	$	45	$	(381)	$	305
	State		25		1		18
	Foreign		891		977		628
			961		597		951
Deferred
	Federal		(30)		(1,470)		(72)
	State		115		(68)		(11)
	Foreign		74		85		(48)
			159		(1,453)		(131)
Income tax expense (benefit)		$	1,120	$	(856)	$	820

Total income taxes differed from the amounts computed by applying the U.S. federal statutory income tax rate to income (loss) before income taxes. The sources of these differences were as follows:

		Years Ended December 31,
millions except percentages		2012			2011			2010
Income (loss) before income taxes
	Domestic	$	132		$	(5,416)		$	855
	Foreign		3,433			1,992			786
Total		$	3,565		$	(3,424)		$	1,641
U.S. federal statutory tax rate			35	%		35	%		35	%
Tax computed at the U.S. federal statutory rate		$	1,248		$	(1,198)		$	574
Adjustments resulting from
	State income taxes (net of federal income tax benefit)		93			(44)			5
	Tax impact from foreign operations		178			54			89
	Algerian exceptional profits taxes		188			258			193
	Non-taxable Algeria exceptional profits tax settlement		(679)			—			—
	Net changes in uncertain tax positions		27			8			28
	Items resulting from business acquisitions		—			19			—
	Other—net		65			47			(69)
Income tax expense (benefit)		$	1,120		$	(856)		$	820
Effective tax rate			31	%		25	%		50	%

Components of total deferred taxes were as follows:

	December 31,
millions	2012		2011
Federal	$	(7,890)	$	(7,916)
State, net of federal		(325)		(252)
Foreign		(216)		(173)
Total deferred taxes	$	(8,431)	$	(8,341)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) were as follows:

	December 31,
millions	2012		2011
Net current deferred tax assets	$	328	$	138
Oil and gas exploration and development operations		(8,683)		(8,187)
Mineral operations		(408)		(407)
Midstream and other depreciable properties		(1,295)		(1,264)
Other		(152)		(1)
Gross long-term deferred tax liabilities		(10,538)		(9,859)
Oil and gas exploration and development costs		762		127
Net operating loss carryforward		477		1,071
Foreign tax credit carryforward and alternative minimum tax credit carryforward		450		119
Other		1,012		618
Gross long-term deferred tax assets		2,701		1,935
Less valuation allowances on deferred tax assets not expected to be realized		(922)		(555)
Net long-term deferred tax assets		1,779		1,380
Net long-term deferred tax liabilities		(8,759)		(8,479)
Total deferred taxes	$	(8,431)	$	(8,341)

Changes to valuation allowances, due to changes in judgment regarding the future realizability of deferred tax assets, werean increase of $23million for 2012 and a decrease of $17 million for 2011. The following summarizes changes in the balance of valuation allowanceson deferred tax assets:

millions		2012		2011		2010
Balance at January 1		$	(555)	$	(454)	$	(418)
	Additions		(426)		(138)		(49)
	Reductions		59		37		13
Balance at December 31		$	(922)	$	(555)	$	(454)

Taxes receivable (payable) related to income tax expense (benefit) were as follows:

millions		December 31,
Balance Sheet Classification		2012		2011
Income taxes receivable
	Accounts receivable—other	$	179	$	597
	Other assets		2		2
			181		599
Income taxes (payable)
	Accrued expense		(38)		(248)
Income taxes receivable (payable)		$	143	$	351

       Tax carryforwards available for use on future income tax returns at December 31, 2012, were as follows:

millions	Domestic		Foreign		Expiration
Net operating loss—federal	$	809	$	—	2031
Net operating loss—foreign	$	—	$	884	2016 - Indefinite
Net operating loss—state	$	4,560	$	—	2012-2031
Alternative minimum tax credit—federal	$	17	$	—	Indefinite
Foreign tax credits	$	433	$	—	2017-2021
Texas margins tax credit	$	36	$	—	2026

Changes in the balance of unrecognized tax benefits excluding interest and penalties on uncertain tax positions were as follows:

		Assets (Liabilities)
millions		2012		2011		2010
Balance at January 1		$	(31)	$	(32)	$	(29)
	Increases related to prior-year tax positions		(17)		—		(13)
	Decreases related to prior-year tax positions		3		3		8
	Increases related to current-year tax positions		(1)		(10)		—
	Settlements		—		8		2
Balance at December 31		$	(46)	$	(31)	$	(32)

Included in the 2012 ending balance of unrecognized tax benefits presented above are potential benefits of $(40)million that would affect the effective tax rate on income if recognized. Also included in the 2012 ending balance are benefits of $(6)million related to tax positions for which the ultimate deductibility is highly certain, but the timing of such deductibility is uncertain. The Company estimates that $(5)million to $(29)million of unrecognized tax benefits related to adjustments to taxable income and credits previously recorded pursuant to the accounting standard for accounting for tax uncertaintieswill reverse within the next 12 months due to expiration of statutes of limitation and audit settlements.

The Company had approximately $28million of accrued interest related to uncertain tax positions at December 31, 2012, and $18 million at December 31, 2011. The Company recognized interest and penalties in income tax expense (benefit) of$9million during 2012 and $(8)million during 2011.

       Anadarko is subject to audit by tax authorities in the U.S. federal, state, and local tax jurisdictions as well as in various foreign jurisdictions. The Company is currently under routine examination by the U.S. Internal Revenue Service for the tax years 2007, 2008, 2010, 2011, and 2012.

       Income tax audits and the Company's acquisition and divestiture activity have given rise to tax disputes in U.S. and foreign jurisdictions. See Note 17—Contingencies—Other Litigation. Management does not believe that the final resolution of outstanding tax audits and litigation will have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.

The following liststhe tax years subject to examination by major tax jurisdiction:

	Tax Year
United States	2007, 2008, 2010-2012
China	2008-2012
Algeria	2009-2012
Ghana	2006-2011