Debt and Financing Costs

9 Months Ended

Sep. 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 September 30, 2011 and December 31, 2010:

	September 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(In millions)
Money market lines of credit	$	17	$	17	$	46	$	46
Commercial paper		—		—		913		913
Notes and debentures		7,185		8,398		7,182		7,870
Total Debt	$	7,202	$	8,415	$	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 September 30, 2011, the Company had unsecured committed revolving syndicated bank credit facilities totaling $3.3 billion, of which $2.3 billion matures in May 2013 and $1.0 billion matures in August 2016. The facilities consist of a $1.5 billion facility, a $1.0 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 September 30, 2011, available borrowing capacity under the Company’s credit facilities was $3.3 billion. The U.S. credit facilities are used to support Apache’s commercial paper program.

     On August 16, 2011, Apache entered into a $1.0 billion five-year syndicated revolving credit facility. The credit facility is subject to covenants, events of default and representations and warranties that are substantially similar to those in Apache’s other revolving credit facilities. The facility may be used for acquisitions and for general corporate purposes or to support the Company’s commercial paper program. Loans under the facility will bear interest at a base rate, as defined in the credit agreement, or at the London Inter-Bank Offered Rate (LIBOR) plus a margin determined by the Company’s senior long-term debt rating.

     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 Apache’s U.S. credit facilities, which expire in 2013 and 2016. As of September 30, 2011, the Company had no commercial paper outstanding, down from $913 million outstanding as of December 31, 2010.

     As of September 30, 2011, current debt included $400 million 6.25-percent notes due within the next 12 months and $17 million borrowed under uncommitted overdraft lines in Argentina. On 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 Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
	(In millions)
Interest expense	$	109		$	86		$	326		$	237
Amortization of deferred loan costs		1			7			4			10
Capitalized interest		(69	)		(29	)		(193	)		(64	)
Interest income		(4	)		(5	)		(14	)		(9	)
Financing costs, net	$	37		$	59		$	123		$	174