Acquisitions

9 Months Ended

Sep. 30, 2011

Disclosure Text Block [Abstract]

Acquisitions

3.  Acquisitions

In May 2011, Anadarko increased its ownership interest in a natural-gas processing plant (Wattenberg Plant), located in northeast Colorado, by acquiring an additional 93% interest for $576 million. Anadarko operates and now owns a 100% interest in the Wattenberg Plant.

In February 2011, Western Gas Partners, LP (WES), a consolidated subsidiary of the Company, acquired a natural-gasprocessing plant and related gathering systems (Platte Valley),located in northeast Colorado,for $302 million.

These acquisitions,along with future expansion plans,align Anadarko's natural-gas processing capacity with the Company's anticipated production growth in the Rocky Mountains Region (Rockies). In addition, these acquisitions position the Company to improve field recoveries and realize operational cost efficiencies.

The Wattenberg Plant and Platte Valley acquisitions constitute business combinations and were accounted for using the acquisition method.The following summarizes the preliminary fair value of assets acquired and liabilities assumed at the acquisition dates:

millions
Properties and equipment		$	298
Intangible assets			165
Deferred income taxes			31
Other assets			4
Other liabilities			(21)
Goodwill			362
	Total assets acquired and liabilities assumed		839
Less: Fair value of Anadarko's pre-acquisition 7% equity interest in the Wattenberg Plant			37
	Acquisition of midstream businesses		802
Loss on Anadarko's preexisting contracts with the previous Wattenberg Plant owner			76
	Total consideration paid	$	878

All fair-value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired properties and equipment is based on market and cost approaches. Intangible assets consist of customer contracts, the fair value of which was determined using an income approach. Deferred tax assets represent the tax effects of differences in the tax basis and acquisition-date fair values of assets acquired and liabilities assumed. Liabilities assumed include asset retirement obligations existing at the date of acquisition, and were valuedconsistent with the Company's policy for estimating its asset retirement obligations.

Assets acquired and liabilities assumed are included within the midstream reporting segment, except for $335 million of goodwill and a portion of the related deferred tax asset recognized in connection with the Wattenberg Plant acquisition, which are included in the oil and gas exploration and production reporting segment. Goodwill of $469 million related to the Wattenberg Plant acquisitionis amortizable for tax purposes.

Goodwill from these acquisitions is included in the oil and gas exploration and production reporting segment and the midstream reporting segment based on the increase in fair value to each of the respective reporting segments.The increase in fair value to these reporting segmentsis derived from improved NGLs volume retention from equity productionand the alignment of Company-controlled natural-gas processing capacity with future production growth plans in the Rockies. Goodwill is not subject to amortization, but will be subject to annualimpairment testing (or more frequent testing as circumstances dictate).At September 30, 2011, the Company had$5.6 billion of goodwill allocated as follows: $5.4 billion to oil and gas exploration and production; $102million to othergathering and processing; $59 million to WES gathering and processing; and $5 million totransportation.

Prior to the Wattenberg Plant acquisition, the Company was party to natural-gasprocessing contracts with the previous Wattenberg Plant owner. As a result of the acquisition, these preexisting contractswereterminated, causing the Company to recognize a$76 million loss,which is included in gains (losses) on divestitures and other, netin the Consolidated Statements of Income for the nine months ended September 30, 2011. This loss represents the aggregate amount by which the contractswere unfavorable as compared to current market transactions for the same or similar services at the date of the Company's acquisition of the Wattenberg Plant.

The Companyalso recognized a gain of $21 million from the acquisition-date fair-value remeasurement ofits pre-acquisition 7% equity interest in the Wattenberg Plant. The gain is included in gains (losses) on divestitures and other, net in the Consolidated Statements of Income for the nine months ended September 30, 2011.

Results of operations attributable to the Wattenberg Plant and PlatteValley acquisitions are included in the Company's Consolidated Statements of Income from the dates acquired. The amounts of revenue and earnings included in the Company's Consolidated Statements of Income for the three and nine months ended September 30, 2011, and the amounts of revenue and earnings that would have been recognized had the acquisitions occurred on January 1, 2010, are not material.