EXHIBIT 99.6
ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements combine the historical consolidated balance sheets and statements of income of Anadarko Petroleum Corporation (“Anadarko” or “the Company”) and Kerr-McGee Corporation (“KMG”), giving effect to the acquisition using the purchase method of accounting. These unaudited pro forma financial statements also include the effects of the subsequent acquisition of Western Gas Resources, Inc. (“WGR”) using the purchase method of accounting. The Company’s Canadian operations have been classified as held for sale and the related results of discontinued operations are excluded from Anadarko’s historical statements of income.
These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements, including the notes thereto, of Anadarko, KMG and WGR, which are included in the annual reports that the companies have filed with the United States Securities and Exchange Commission and as exhibits in this Form 8-K/A.
The unaudited pro forma combined statements of income assume the acquisitions occurred on January 1, 2005. The unaudited pro forma combined balance sheet gives effect to the acquisitions as if they had occurred on June 30, 2006.
The unaudited pro forma financial statements are presented for illustration purposes only, in accordance with the assumptions set forth below, and are not necessarily indicative of the operating results or financial position that would have occurred had the acquisitions been completed at the assumed dates. Nor is it necessarily indicative of future operating results or the financial position of the combined enterprise. The unaudited pro forma condensed combined financial statements do not reflect any adjustments to conform accounting practices, other than those mentioned in the notes thereto, or to reflect any cost savings or other synergies anticipated as a result of the acquisitions, or any future merger related expenses.
ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2005
| | | | | | | | | | | | | | | | | | | |
millions except per share amounts | | Anadarko | | | KMG * | | | WGR * | | Pro Forma Adjustments | | | Pro Forma Combined | |
Revenues | | | | | | | | | | | | | | | | | | | |
Gas sales | | $ | 2,968 | | | $ | 2,036 | | | $ | 410 | | $ | — | | | $ | 5,414 | |
Oil and condensate sales | | | 2,703 | | | | 1,515 | | | | — | | | — | | | | 4,218 | |
Natural gas liquids sales | | | 437 | | | | 135 | | | | — | | | — | | | | 572 | |
Other sales | | | 79 | | | | 877 | | | | 3,559 | | | — | | | | 4,515 | |
| | | | | | | | | | | | | | | | | | | |
Total | | | 6,187 | | | | 4,563 | | | | 3,969 | | | — | | | | 14,719 | |
| | | | | | | | | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | | | | | | | | |
Direct operating | | | 437 | | | | 494 | | | | 69 | | | — | | | | 1,000 | |
Transportation and cost of product | | | 275 | | | | 1,004 | | | | 3,326 | | | — | | | | 4,605 | |
Exploration expense | | | — | | | | 389 | | | | 45 | | | (434 | )(a) | | | — | |
General and administrative | | | 393 | | | | 260 | | | | 60 | | | — | | | | 713 | |
Depreciation, depletion and amortization | | | 1,111 | | | | 871 | | | | 129 | | | 433 | (b) | | | 2,544 | |
Other taxes | | | 358 | | | | 157 | | | | — | | | — | | | | 515 | |
Impairments and (gains) losses on assets | | | 78 | | | | (194 | ) | | | 1 | | | 193 | (c) | | | 78 | |
| | | | | | | | | | | | | | | | | | | |
Total | | | 2,652 | | | | 2,981 | | | | 3,630 | | | 192 | | | | 9,455 | |
| | | | | | | | | | | | | | | | | | | |
Operating Income | | | 3,535 | | | | 1,582 | | | | 339 | | | (192 | ) | | | 5,264 | |
| | | | | |
Interest Expense and Other (Income) Expense | | | | | | | | | | | | | | | | | | | |
Interest expense | | | 206 | | | | 268 | | | | 17 | | | 595 | (d) | | | 1,086 | |
Other (income) expense | | | (76 | ) | | | (104 | ) | | | — | | | — | (d) | | | (180 | ) |
| | | | | | | | | | | | | | | | | | | |
Total | | | 130 | | | | 164 | | | | 17 | | | 595 | | | | 906 | |
| | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations Before Income Taxes | | | 3,405 | | | | 1,418 | | | | 322 | | | (787 | ) | | | 4,358 | |
Income Tax Expense | | | 1,332 | | | | 486 | | | | 115 | | | (286 | )(e) | | | 1,647 | |
| | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations | | $ | 2,073 | | | $ | 932 | | | $ | 207 | | $ | (501 | ) | | $ | 2,711 | |
| | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations – Per Common Share | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 4.40 | | | | | | | | | | | | | | $ | 5.77 | |
Diluted | | $ | 4.36 | | | | | | | | | | | | | | $ | 5.71 | |
Average Number of Common Shares Outstanding – Basic | | | 470 | | | | | | | | | | | | | | | 470 | |
| | | | | | | | | | | | | | | | | | | |
Average Number of Common Shares Outstanding – Diluted | | | 475 | | | | | | | | | | | | | | | 475 | |
| | | | | | | | | | | | | | | | | | | |
* | Certain amounts have been reclassified to conform to Anadarko’s current presentation. SeeSummary of Conforming Adjustments. |
See accompanying notes to unaudited pro forma condensed combined financial statements.
2
ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2006
| | | | | | | | | | | | | | | | | | | |
millions except per share amounts | | Anadarko | | | KMG * | | | WGR * | | Pro Forma Adjustments | | | Pro Forma Combined | |
Revenues | | | | | | | | | | | | | | | | | | | |
Gas sales | | $ | 1,371 | | | $ | 1,383 | | | $ | 209 | | $ | — | | | $ | 2,963 | |
Oil and condensate sales | | | 1,808 | | | | 688 | | | | — | | | — | | | | 2,496 | |
Natural gas liquids sales | | | 245 | | | | 91 | | | | — | | | — | | | | 336 | |
Other sales | | | 86 | | | | 405 | | | | 1,572 | | | — | | | | 2,063 | |
| | | | | | | | | | | | | | | | | | | |
Total | | | 3,510 | | | | 2,567 | | | | 1,781 | | | — | | | | 7,858 | |
| | | | | | | | | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | | | | | | | | |
Direct operating | | | 284 | | | | 259 | | | | 36 | | | — | | | | 579 | |
Transportation and cost of product | | | 183 | | | | 468 | | | | 1,431 | | | — | | | | 2,082 | |
Exploration expense | | | — | | | | 158 | | | | 29 | | | (187 | )(a) | | | — | |
General and administrative | | | 228 | | | | 145 | | | | 41 | | | — | | | | 414 | |
Depreciation, depletion and amortization | | | 655 | | | | 390 | | | | 71 | | | 250 | (b) | | | 1,366 | |
Other taxes | | | 208 | | | | 74 | | | | — | | | — | | | | 282 | |
Impairments and (gains) losses on assets | | | 18 | | | | (5 | ) | | | — | | | 5 | (c) | | | 18 | |
| | | | | | | | | | | | | | | | | | | |
Total | | | 1,576 | | | | 1,489 | | | | 1,608 | | | 68 | | | | 4,741 | |
| | | | | | | | | | | | | | | | | | | |
Operating Income | | | 1,934 | | | | 1,078 | | | | 173 | | | (68 | ) | | | 3,117 | |
Interest Expense and Other (Income) Expense | | | | | | | | | | | | | | | | | | | |
Interest expense | | | 104 | | | | 171 | | | | 9 | | | 298 | (d) | | | 582 | |
Other (income) expense | | | (7 | ) | | | 6 | | | | — | | | — | | | | (1 | ) |
| | | | | | | | | | | | | | | | | | | |
Total | | | 97 | | | | 177 | | | | 9 | | | 298 | | | | 581 | |
| | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations Before Income Taxes | | | 1,837 | | | | 901 | | | | 164 | | | (366 | ) | | | 2,536 | |
Income Tax Expense | | | 609 | | | | 319 | | | | 60 | | | (129 | )(e) | | | 859 | |
| | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations | | $ | 1,228 | | | $ | 582 | | | $ | 104 | | $ | (237 | ) | | $ | 1,677 | |
| | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations – Per Common Share | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 2.67 | | | | | | | | | | | | | | $ | 3.65 | |
Diluted | | $ | 2.65 | | | | | | | | | | | | | | $ | 3.61 | |
Average Number of Common Shares Outstanding – Basic | | | 460 | | | | | | | | | | | | | | | 460 | |
| | | | | | | | | | | | | | | | | | | |
Average Number of Common Shares Outstanding – Diluted | | | 464 | | | | | | | | | | | | | | | 464 | |
| | | | | | | | | | | | | | | | | | | |
* | Certain amounts have been reclassified to conform to Anadarko’s current presentation. SeeSummary of Conforming Adjustments. |
See accompanying notes to unaudited pro forma condensed combined financial statements.
3
ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2006
| | | | | | | | | | | | | | | | |
millions | | Anadarko | | KMG | | WGR | | Pro Forma Adjustments | | | Pro Forma Combined |
ASSETS | | | | | | | | | | | | | | | | |
| | | | | |
Current Assets | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 671 | | $ | 156 | | $ | 4 | | $ | — | | | $ | 831 |
Accounts receivable | | | 1,325 | | | 751 | | | 286 | | | — | | | | 2,362 |
Other current assets | | | 207 | | | 584 | | | 203 | | | — | | | | 994 |
Current assets held for sale | | | 369 | | | 24 | | | — | | | — | | | | 393 |
| | | | | | | | | | | | | | | | |
| | | 2,572 | | | 1,515 | | | 493 | | | — | | | | 4,580 |
| | | | | | | | | | | | | | | | |
Properties and Equipment | | | | | | | | | | | | | | | | |
Original cost | | | 24,825 | | | 12,091 | | | 2,641 | | | 11,409 | (f) | | | 50,966 |
Less accumulated DD&A | | | 8,592 | | | 3,874 | | | 751 | | | (4,625 | )(f) | | | 8,592 |
| | | | | | | | | | | | | | | | |
Net properties and equipment | | | 16,233 | | | 8,217 | | | 1,890 | | | 16,034 | | | | 42,374 |
| | | | | | | | | | | | | | | | |
Other Assets | | | 609 | | | 321 | | | 105 | | | — | | | | 1,035 |
| | | | | | | | | | | | | | | | |
Goodwill and Intangibles | | | 1,092 | | | 1,175 | | | — | | | 5,410 | (f) | | | 7,677 |
| | | | | | | | | | | | | | | | |
Long-Term Assets Held For Sale | | | 3,159 | | | 710 | | | — | | | 447 | (f) | | | 4,316 |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 23,665 | | $ | 11,938 | | $ | 2,488 | | $ | 21,891 | | | $ | 59,982 |
| | | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
| | | | | |
Current Liabilities | | | | | | | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | 1,690 | | $ | 2,159 | | $ | 462 | | $ | — | | | $ | 4,311 |
Current debt | | | 211 | | | 309 | | | — | | | 21,940 | (g) | | | 22,460 |
Liabilities associated with assets held for sale | | | 306 | | | 25 | | | — | | | — | | | | 331 |
| | | | | | | | | | | | | | | | |
| | | 2,207 | | | 2,493 | | | 462 | | | 21,940 | | | | 27,102 |
| | | | | | | | | | | | | | | | |
Long-term Debt | | | 3,361 | | | 2,097 | | | 572 | | | (390 | )(g) | | | 5,640 |
| | | | | | | | | | | | | | | | |
Other Long-term Liabilities | | | | | | | | | | | | | | | | |
Deferred income taxes | | | 4,070 | | | 1,620 | | | 357 | | | 5,821 | (f) | | | 11,868 |
Other | | | 951 | | | 986 | | | 71 | | | — | | | | 2,008 |
Liabilities associated with assets held for sale | | | 712 | | | 126 | | | — | | | 162 | (f) | | | 1,000 |
| | | | | | | | | �� | | | | | | | |
Total | | | 5,733 | | | 2,732 | | | 428 | | | 5,983 | | | | 14,876 |
| | | | | | | | | | | | | | | | |
Stockholders’ equity | | | 12,364 | | | 4,616 | | | 1,026 | | | (5,642 | )(h) | | | 12,364 |
| | | | | | | | | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 23,665 | | $ | 11,938 | | $ | 2,488 | | $ | 21,891 | | | $ | 59,982 |
| | | | | | | | | | | | | | | | |
See accompanying notes to unaudited pro forma condensed combined financial statements.
4
ANADARKO PETROLEUM CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Pro Forma Income Statement Adjustments
(a) | To eliminate KMG’s and WGR’s exploration expense to conform to the full-cost method of accounting for oil and gas activities. KMG’s and WGR’s historical results were prepared in accordance with the successful efforts method of accounting. |
(b) | To adjust depreciation, depletion and amortization (DD&A) expense to be in accordance with the full-cost method of accounting for oil and gas activities and to record DD&A expense on the estimated fair value of other depreciable assets. Producing properties, grouped by country, are depleted utilizing the unit-of-production method, while gathering and processing facilities are depreciated on a straight-line basis with lives ranging from 17 to 20 years. Based on current production rates, the reserve life index of proved reserves acquired range from 6 to 10 years. |
(c) | To eliminate KMG’s and WGR’s historical impairments and gains or losses on sales of oil and gas properties to conform to the full-cost method of accounting for oil and gas activities. |
(d) | To record pro forma interest expense on debt incurred to acquire KMG and WGR, less amounts capitalized on unevaluated properties. |
The Company’s policy is that oil and gas investments in unproved properties and major development projects, on which DD&A expense is not currently recorded and on which exploration or development activities are in progress, qualify for capitalization of interest. The Company is continuing to evaluate its exploration and development plans with respect to the acreage acquired in the acquisitions. Pending finalization of those plans, it has been assumed for purposes of these pro forma financial statements that all unevaluated acreage acquired qualifies for capitalization of interest. Accordingly, interest of $639 million and $320 million for the year ended December 31, 2005 and the six months ended June 30, 2006, respectively, has been capitalized on the carrying costs of unevaluated properties for the periods presented. The ultimate amount to be capitalized will be impacted by amounts actually recorded to unevaluated properties and finalization of our exploration and development plans for those properties.
The amount of incremental interest expense was calculated based on the average variable interest rate in effect on the Company’s 364-day committed acquisition facility on the funding date, which was approximately 5.7%. A change in the interest rate of 0.125% would impact pro forma operating income by approximately $15 million on an annual basis.
KMG’s historical interest expense includes charges for $42 million and $81 million related to early debt retirement or modification for the year ended December 31, 2005 and the six months ended June 30, 2006, respectively. KMG’s historical other income for the year ended December 31, 2005, includes a $120 million gain on sale of an equity investment.
(e) | To record income tax expense on the pro forma adjustments based on the applicable statutory federal and state income tax rates. |
Pro Forma Balance Sheet Adjustments
(f) | To adjust KMG’s and WGR’s historical properties and equipment and long-term assets held for sale to fair value, to record goodwill and deferred income taxes associated with the purchase price allocation and to reverse KMG’s and WGR’s historical accumulated DD&A and goodwill. |
(g) | To record debt incurred of $21.3 billion to purchase KMG and WGR (see Purchase Price Allocation) and to reflect a $232 million increase in the estimated fair value of KMG’s and WGR’s historical debt. |
(h) | To eliminate KMG’s and WGR’s historical stockholders’ equity. |
5
Purchase Price Allocation Following is a calculation and allocation of the purchase price to the assets acquired and liabilities assumed based on their relative fair values.
| | | | | | | | | |
millions | | KMG | | WGR | | Total |
Purchase price | | $ | 16,507 | | $ | 4,811 | | $ | 21,318 |
| | | | | | | | | |
| | | |
Allocation of Purchase Price | | | | | | | | | |
Current assets | | $ | 1,515 | | $ | 493 | | $ | 2,008 |
Property and equipment | | | 19,238 | | | 6,903 | | | 26,141 |
Other assets | | | 1,478 | | | 105 | | | 1,583 |
Goodwill | | | 5,940 | | | 645 | | | 6,585 |
Current debt - acquired | | | 306 | | | 625 | | | 931 |
Current liabilities | | | 2,184 | | | 462 | | | 2,646 |
Long-term debt | | | 2,279 | | | — | | | 2,279 |
Deferred income taxes | | | 5,621 | | | 2,177 | | | 7,798 |
Other long-term liabilities | | | 1,274 | | | 71 | | | 1,345 |
| | | | | | | | | |
| | $ | 16,507 | | $ | 4,811 | | $ | 21,318 |
| | | | | | | | | |
The above purchase price has been allocated based on a preliminary assessment of the fair value of the assets acquired and liabilities assumed from KMG and WGR. The preliminary assessment of fair value resulted in $6.6 billion of goodwill, which will be subject to periodic impairment testing, in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” The purchase price allocation is tentative and does not reflect final appraisals of assets acquired or final evaluation of all liabilities assumed as of the August 10, 2006 and August 23, 2006 acquisition dates for KMG and WGR, respectively.
The preliminary assessment of the fair values of oil and gas properties and certain plant and gathering facilities acquired were based on projections of expected future net cash flows, discounted to present value. KMG’s and WGR’s other assets and liabilities were valued at their historical book values. The historical liabilities acquired include certain amounts associated with contingencies, such as legal, environmental and guarantees, which were estimated by the management of KMG and WGR. Long-term debt assumed was valued at fair value based on the prices of KMG’s publicly traded debt. These and other preliminary estimates will change as additional information becomes available and is assessed by Anadarko.
6
Summary of Conforming Adjustments
Kerr-McGee Corporation
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2005 | | | Six Months Ended June 30, 2006 | |
| | Historical KMG | | | Conforming Adjustments | | | Conformed KMG | | | Historical KMG | | | Conforming Adjustments | | | Conformed KMG | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
Oil and gas sales | | $ | 4,704 | | | $ | (4,704 | ) | | $ | — | | | $ | 2,406 | | | $ | (2,406 | ) | | $ | — | |
Loss on commodity derivatives | | | (1,018 | ) | | | 1,018 | | | | — | | | | (244 | ) | | | 244 | | | | — | |
Gas sales | | | — | | | | 2,036 | | | | 2,036 | | | | — | | | | 1,383 | | | | 1,383 | |
Oil and condensate sales | | | — | | | | 1,515 | | | | 1,515 | | | | — | | | | 688 | | | | 688 | |
Natural gas liquids sales | | | — | | | | 135 | | | | 135 | | | | — | | | | 91 | | | | 91 | |
Gas marketing revenues | | | 804 | | | | (804 | ) | | | — | | | | 360 | | | | (360 | ) | | | — | |
Other sales | | | 73 | | | | 804 | | | | 877 | | | | 45 | | | | 360 | | | | 405 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 4,563 | | | | — | | | | 4,563 | | | | 2,567 | | | | — | | | | 2,567 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
Direct operating | | | 494 | | | | — | | | | 494 | | | | 259 | | | | — | | | | 259 | |
Transportation expense | | | 92 | | | | (92 | ) | | | — | | | | 48 | | | | (48 | ) | | | — | |
Gas marketing costs | | | 800 | | | | (800 | ) | | | — | | | | 359 | | | | (359 | ) | | | — | |
Gas gathering, processing and other | | | 112 | | | | (112 | ) | | | — | | | | 61 | | | | (61 | ) | | | — | |
Transportation and cost of product | | | — | | | | 1,004 | | | | 1,004 | | | | — | | | | 468 | | | | 468 | |
Merger related costs | | | — | | | | — | | | | — | | | | 8 | | | | (8 | ) | | | — | |
Provision for environmental remediation costs | | | 12 | | | | (12 | ) | | | — | | | | 3 | | | | (3 | ) | | | — | |
General and administrative | | | 248 | | | | 12 | | | | 260 | | | | 134 | | | | 11 | | | | 145 | |
Production and ad valorem taxes | | | 157 | | | | (157 | ) | | | — | | | | 74 | | | | (74 | ) | | | — | |
Other taxes | | | — | | | | 157 | | | | 157 | | | | — | | | | 74 | | | | 74 | |
Accretion expense | | | 22 | | | | (22 | ) | | | — | | | | 7 | | | | (7 | ) | | | — | |
Depreciation, depletion and amortization | | | 849 | | | | 22 | | | | 871 | | | | 383 | | | | 7 | | | | 390 | |
Asset impairments | | | 17 | | | | (17 | ) | | | — | | | | — | | | | — | | | | — | |
Impairments and (gain) losses on assets | | | (211 | ) | | | 17 | | | | (194 | ) | | | (5 | ) | | | — | | | | (5 | ) |
Exploration expense | | | 389 | | | | — | | | | 389 | | | | 158 | | | | — | | | | 158 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2,981 | | | | — | | | | 2,981 | | | | 1,489 | | | | — | | | | 1,489 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | | 1,582 | | | | — | | | | 1,582 | | | | 1,078 | | | | — | | | | 1,078 | |
| | | | | | |
Interest Expense and Other (Income) Expense | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on early repayment and modification of debt | | | 42 | | | | (42 | ) | | | — | | | | 81 | | | | (81 | ) | | | — | |
Interest expense | | | 226 | | | | 42 | | | | 268 | | | | 90 | | | | 81 | | | | 171 | |
Other (income) expense | | | (104 | ) | | | — | | | | (104 | ) | | | 6 | | | | — | | | | 6 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 164 | | | | — | | | | 164 | | | | 177 | | | | — | | | | 177 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations before Taxes | | | 1,418 | | | | — | | | | 1,418 | | | | 901 | | | | — | | | | 901 | |
Income Tax Expense | | | 486 | | | | — | | | | 486 | | | | 319 | | | | — | | | | 319 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations | | $ | 932 | | | $ | — | | | $ | 932 | | | $ | 582 | | | $ | — | | | $ | 582 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
7
Western Gas Resources
| | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2005 | | Six Months Ended June 30, 2006 |
| | Historical WGR | | | Conforming Adjustments | | | Conformed WGR | | Historical WGR | | | Conforming Adjustments | | | Conformed WGR |
Revenues | | | | | | | | | | | | | | | | | | | | | | |
Gas sales | | $ | 3,201 | | | $ | (2,791 | ) | | $ | 410 | | $ | 1,348 | | | $ | (1,139 | ) | | $ | 209 |
Sales of natural gas liquids | | | 655 | | | | (655 | ) | | | — | | | 340 | | | | (340 | ) | | | — |
Gathering, processing and transportation | | | 106 | | | | (106 | ) | | | — | | | 54 | | | | (54 | ) | | | — |
Price risk management activities | | | (9 | ) | | | 9 | | | | — | | | 30 | | | | (30 | ) | | | — |
Other sales (1) | | | 6 | | | | 3,553 | | | | 3,559 | | | 4 | | | | 1,568 | | | | 1,572 |
| | | | | | | | | | | | | | | | | | | | | | |
Total | | | 3,959 | | | | 10 | | | | 3,969 | | | 1,776 | | | | 5 | | | | 1,781 |
| | | | | | | | | | | | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | | | | | | | | | | | |
Product purchases | | | 3,210 | | | | (3,210 | ) | | | — | | | 1,369 | | | | (1,369 | ) | | | — |
Plant transportation and operating expense | | | 116 | | | | (116 | ) | | | — | | | 62 | | | | (62 | ) | | | — |
Transportation and cost of product | | | — | | | | 3,326 | | | | 3,326 | | | — | | | | 1,431 | | | | 1,431 |
Oil and gas exploration and production costs | | | 114 | | | | (114 | ) | | | — | | | 65 | | | | (65 | ) | | | — |
Direct operating | | | — | | | | 69 | | | | 69 | | | — | | | | 36 | | | | 36 |
Exploration expense | | | — | | | | 45 | | | | 45 | | | — | | | | 29 | | | | 29 |
Selling and administrative expenses | | | 60 | | | | (60 | ) | | | — | | | 41 | | | | (41 | ) | | | — |
General and administrative | | | — | | | | 60 | | | | 60 | | | — | | | | 41 | | | | 41 |
Depreciation, depletion and amortization | | | 129 | | | | — | | | | 129 | | | 71 | | | | — | | | | 71 |
Impairments and (gain) losses on assets | | | 1 | | | | — | | | | 1 | | | — | | | | — | | | | — |
Earnings from equity investments | | | (10 | ) | | | 10 | | | | — | | | (5 | ) | | | 5 | | | | — |
Interest expense | | | 17 | | | | (17 | ) | | | — | | | 9 | | | | (9 | ) | | | — |
| | | | | | | | | | | | | | | | | | | | | | |
Total | | | 3,637 | | | | (7 | ) | | | 3,630 | | | 1,612 | | | | (4 | ) | | | 1,608 |
| | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | | 322 | | | | 17 | | | | 339 | | | 164 | | | | 9 | | | | 173 |
| | | | | | |
Interest Expense and Other (Income) Expense | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | — | | | | 17 | | | | 17 | | | — | | | | 9 | | | | 9 |
Other (income) expense | | | — | | | | — | | | | — | | | — | | | | — | | | | — |
| | | | | | | | | | | | | | | | | | | | | | |
Total | | | — | | | | 17 | | | | 17 | | | — | | | | 9 | | | | 9 |
| | | | | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations before Taxes | | | 322 | | | | — | | | | 322 | | | 164 | | | | — | | | | 164 |
Income Tax Expense | | | 115 | | | | — | | | | 115 | | | 60 | | | | — | | | | 60 |
| | | | | | | | | | | | | | | | | | | | | | |
Income from Continuing Operations | | $ | 207 | | | $ | — | | | $ | 207 | | $ | 104 | | | $ | — | | | $ | 104 |
| | | | | | | | | | | | | | | | | | | | | | |
(1) | Other sales includes revenues from the sales of third party natural gas and NGLs and processing fees. |
8