Debt and Financing Costs

6 Months Ended

Jun. 30, 2011

Debt and Financing Costs [Abstract]

DEBT AND FINANCING COSTS

5. DEBT AND FINANCING COSTS

     The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt at June 30, 2011 and December 31, 2010:

	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
			(In millions)
Money market lines of credit	$	48	$	48	$	46	$	46
Commercial paper		620		620		913		913
Notes and debentures		7,184		7,818		7,182		7,870
Total Debt	$	7,852	$	8,486	$	8,141	$	8,829

     The Company’s debt is recorded at the carrying amount on its consolidated balance sheet, net of unamortized discount. The carrying amount of the Company’s money market lines of credit and commercial paper approximates fair value because the interest rates are reflective of market rates. Apache uses a market approach to determine the fair value of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).

     As of June 30, 2011, the Company had unsecured committed revolving syndicated bank credit facilities totaling $3.3 billion, of which $1.0 billion matures in August 2011 and $2.3 billion matures in May 2013. The facilities consist of a $1.0 billion 364-day facility, a $1.5 billion facility and a $450 million facility in the U.S., a $200 million facility in Australia, and a $150 million facility in Canada. As of June 30, 2011, available borrowing capacity under the Company’s credit facilities was $2.7 billion. The U.S. credit facilities are used to support Apache’s commercial paper program.

     The Company is currently in negotiations to replace its $1.0 billion 364-day facility with a $1.0 billion five-year facility. This five-year facility will have terms similar to those of the Company’s other five-year facilities. It is anticipated that the facility will become effective in August 2011.

     The Company has available a $2.95 billion commercial paper program, which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under U.S. committed credit facilities, which expire in 2011 and 2013. As of June 30, 2011, the Company had $620 million in commercial paper outstanding, compared with $913 million outstanding as of December 31, 2010.

     As of June 30, 2011, current debt includes $400 million 6.25-percent notes due within the next 12 months and $48 million borrowed under uncommitted overdraft lines in Argentina and Canada. As of December 31, 2010, current debt included $46 million drawn on uncommitted overdraft lines in the U.S. and Argentina.

Financing Costs

     Financing costs incurred during the periods comprised the following:

	For the Quarter Ended						For the Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
				(In millions)
Interest expense	$	109		$	75		$	217		$	151
Amortization of deferred loan costs		1			1			3			3
Capitalized interest		(63	)		(18	)		(124	)		(35	)
Interest income		(6	)		(2	)		(10	)		(4	)
Financing costs, net	$	41		$	56		$	86		$	115