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 Nine Months Ended millions 2015 2014 2015 2014 Income (loss) before income taxes $ (3,077 ) $ 1,774 $ (7,520 ) $ 506 Exploration expense 1,074 199 2,260 1,000 DD&A 1,111 1,163 3,581 3,335 Impairments 758 394 3,571 514 Interest expense 199 204 616 573 Total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives 360 (276 ) 374 324 Deepwater Horizon settlement and related costs — 3 4 96 Tronox-related contingent loss — 19 5 4,338 Certain other nonoperating items — 22 22 22 Less net income attributable to noncontrolling interests 75 60 154 142 Consolidated Adjusted EBITDAX $ 350 $ 3,442 $ 2,759 $ 10,566 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 September 30, 2015 Sales revenues $ 1,067 $ 195 $ 968 $ — $ 2,230 Intersegment revenues 750 315 (832 ) (233 ) — Gains (losses) on divestitures and other, net (557 ) (22 ) — 37 (542 ) Total revenues and other 1,260 488 136 (196 ) 1,688 Operating costs and expenses (1) 840 287 181 (14 ) 1,294 Net cash from settlement of commodity derivatives — — — (79 ) (79 ) Other (income) expense, net (2) — — — 47 47 Net income attributable to noncontrolling interests — 75 — — 75 Total expenses and other 840 362 181 (46 ) 1,337 Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement — — (1 ) — (1 ) Adjusted EBITDAX $ 420 $ 126 $ (46 ) $ (150 ) $ 350 Three Months Ended September 30, 2014 Sales revenues $ 2,192 $ 119 $ 1,919 $ — $ 4,230 Intersegment revenues 1,604 364 (1,774 ) (194 ) — Gains (losses) on divestitures and other, net 724 1 — 55 780 Total revenues and other 4,520 484 145 (139 ) 5,010 Operating costs and expenses (1) 1,090 249 188 26 1,553 Net cash from settlement of commodity derivatives — — — (48 ) (48 ) Other (income) expense, net (2) — — — 2 2 Net income attributable to noncontrolling interests — 60 — — 60 Total expenses and other 1,090 309 188 (20 ) 1,567 Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement — — (1 ) — (1 ) Adjusted EBITDAX $ 3,430 $ 175 $ (44 ) $ (119 ) $ 3,442 __________________________________________________________________ (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 Nine Months Ended September 30, 2015 Sales revenues $ 3,493 $ 560 $ 3,399 $ — $ 7,452 Intersegment revenues 2,752 920 (2,977 ) (695 ) — Gains (losses) on divestitures and other, net (990 ) (19 ) — 202 (807 ) Total revenues and other 5,255 1,461 422 (493 ) 6,645 Operating costs and expenses (1) 2,674 761 571 (110 ) 3,896 Net cash from settlement of commodity derivatives — — — (251 ) (251 ) Other (income) expense, net (2) — — — 87 87 Net income attributable to noncontrolling interests — 154 — — 154 Total expenses and other 2,674 915 571 (274 ) 3,886 Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement — — — — — Adjusted EBITDAX $ 2,581 $ 546 $ (149 ) $ (219 ) $ 2,759 Nine Months Ended September 30, 2014 Sales revenues $ 6,804 $ 358 $ 5,791 $ — $ 12,953 Intersegment revenues 4,947 1,010 (5,369 ) (588 ) — Gains (losses) on divestitures and other, net 2,194 (2 ) — 148 2,340 Total revenues and other 13,945 1,366 422 (440 ) 15,293 Operating costs and expenses (1) 3,128 732 555 51 4,466 Net cash from settlement of commodity derivatives — — — 132 132 Other (income) expense, net (2) — — — (10 ) (10 ) Net income attributable to noncontrolling interests — 142 — — 142 Total expenses and other 3,128 874 555 173 4,730 Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement — — 3 — 3 Adjusted EBITDAX $ 10,817 $ 492 $ (130 ) $ (613 ) $ 10,566 __________________________________________________________________ (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. |