Debt and Financing Costs

9 Months Ended

Sep. 30, 2015

5.	DEBT AND FINANCING COSTS

The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt:


	September 30, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)

Commercial paper and committed bank facilities	$	—	$	—	$	1,570	$	1,570
Notes and debentures		8,777		8,829		9,675		9,944

Total Debt	$	8,777	$	8,829	$	11,245	$	11,514

The Company’s debt is recorded at the carrying amount, net of unamortized discount, on its consolidated balance sheet. The carrying amount of the Company’s commercial paper, committed bank facilities and uncommitted bank lines, and overdraft lines approximates fair value because the interest rates are variable and 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).

In June 2015, the Company entered into a $3.5 billion five-year revolving credit facility which matures in June 2020. Proceeds from borrowings may be used for general corporate purposes. Apache’s available borrowing capacity under this facility supports its commercial paper program. In connection with entry into the $3.5 billion facility, Apache terminated existing credit facilities totaling $5.3 billion.

The Company has available a $3.5 billion commercial paper program, which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. As of September 30, 2015, the Company had no debt outstanding under commercial paper, committed bank facilities, and uncommitted bank lines.

On September 1, 2015, the Company fully redeemed its $500 million 5.625% notes due in 2017 and its $400 million 1.75% notes due in 2017. The notes were redeemed pursuant to the provisions of each respective note’s indenture. Apache paid the holders an aggregate of $939 million in cash reflecting principal and the premium to par, and an additional $8 million in accrued and unpaid interest.

Financing Costs, Net

The following table presents the components of Apache’s financing costs, net:


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
	(In millions)

Interest expense	$	120		$	125		$	371		$	373
Amortization of deferred loan costs		6			2			10			5
Capitalized interest		(56	)		(66	)		(173	)		(216	)
Loss on extinguishment of debt		39			—			39			—
Interest income		(2	)		(1	)		(7	)		(5	)

Financing costs, net	$	107		$	60		$	240		$	157