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, condensate, natural-gas, and NGLs production as well as third-party purchased volumes. 19. Segment Information (Continued) 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, Deepwater Horizon settlement and related costs included in other operating expenses, loss on early extinguishment of debt, 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 Six Months Ended millions 2016 2015 2016 2015 Income (loss) before income taxes $ (925 ) $ 185 $ (2,306 ) $ (4,443 ) (Gains) losses on divestitures, net 104 91 102 425 Exploration expense 76 103 202 1,186 DD&A 984 1,214 2,133 2,470 Impairments 18 30 34 2,813 Interest expense 217 201 437 417 Total (gains) losses on derivatives, net, less net cash from settlement of commodity derivatives 371 (229 ) 775 14 Restructuring charges 48 — 251 — Other operating expense — — 1 4 Loss on early extinguishment of debt 124 — 124 — Tronox-related contingent loss — — — 5 Certain other nonoperating items (56 ) — (56 ) 22 Less net income (loss) attributable to noncontrolling interests 81 47 117 79 Consolidated Adjusted EBITDAX $ 880 $ 1,548 $ 1,580 $ 2,834 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 June 30, 2016 Sales revenues $ 1,033 $ 141 $ 811 $ — $ 1,985 Intersegment revenues 567 340 (676 ) (231 ) — Other — — — 34 34 Total revenues and other (1) 1,600 481 135 (197 ) 2,019 Operating costs and expenses (2) 790 219 177 (65 ) 1,121 Net cash from settlement of commodity derivatives — — — (60 ) (60 ) Other (income) expense, net (3) — — — 1 1 Net income (loss) attributable to noncontrolling interests — 81 — — 81 Total expenses and other 790 300 177 (124 ) 1,143 Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement — — 4 — 4 Adjusted EBITDAX $ 810 $ 181 $ (38 ) $ (73 ) $ 880 Three Months Ended June 30, 2015 Sales revenues $ 1,356 $ 191 $ 1,090 $ — $ 2,637 Intersegment revenues 885 303 (954 ) (234 ) — Other — — — 90 90 Total revenues and other (1) 2,241 494 136 (144 ) 2,727 Operating costs and expenses (2) 832 234 192 (59 ) 1,199 Net cash from settlement of commodity derivatives — — — (82 ) (82 ) Other (income) expense, net — — — 15 15 Net income (loss) attributable to noncontrolling interests — 47 — — 47 Total expenses and other 832 281 192 (126 ) 1,179 Adjusted EBITDAX $ 1,409 $ 213 $ (56 ) $ (18 ) $ 1,548 __________________________________________________________________ (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. 19. Segment Information (Continued) millions Oil and Gas Exploration & Production Midstream Marketing Other and Intersegment Eliminations Total Six Months Ended June 30, 2016 Sales revenues $ 1,744 $ 266 $ 1,609 $ — $ 3,619 Intersegment revenues 1,168 642 (1,339 ) (471 ) — Other — — — 72 72 Total revenues and other (1) 2,912 908 270 (399 ) 3,691 Operating costs and expenses (2) 1,563 402 353 (154 ) 2,164 Net cash from settlement of commodity derivatives — — — (163 ) (163 ) Other (income) expense, net (3) — — — 1 1 Net income (loss) attributable to noncontrolling interests — 117 — — 117 Total expenses and other 1,563 519 353 (316 ) 2,119 Total (gains) losses on derivatives, net included in marketing revenue, less net cash from settlement — — 8 — 8 Adjusted EBITDAX $ 1,349 $ 389 $ (75 ) $ (83 ) $ 1,580 Six Months Ended June 30, 2015 Sales revenues $ 2,426 $ 365 $ 2,431 $ — $ 5,222 Intersegment revenues 2,002 605 (2,145 ) (462 ) — Other — — — 160 160 Total revenues and other (1) 4,428 970 286 (302 ) 5,382 Operating costs and expenses (2) 1,834 474 390 (96 ) 2,602 Net cash from settlement of commodity derivatives — — — (172 ) (172 ) Other (income) expense, net (3) — — — 40 40 Net income (loss) 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 $ 2,594 $ 417 $ (103 ) $ (74 ) $ 2,834 __________________________________________________________________ (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. |