Segment Information

3 Months Ended

Mar. 31, 2013

Disclosure Text Block [Abstract]

Segment Information

14.  Segment Information

Anadarko's business segments are separately managed due to distinct operational differences and unique technology, distribution, and marketing requirements. The Company's three reporting segments are oil and gas exploration and production, midstream, and marketing. The oil and gas exploration and production segment explores for and produces natural gas, crude oil, condensate, and NGLs. The midstream segment engages in gathering, processing, treating, and transporting Anadarko and third-party oil, natural-gas, and NGLs production. The midstream reporting segment consists of two operating segments, WES and other midstream, which are aggregated into one reporting segment due to similar financial and operating characteristics. The marketing segment sells much of Anadarko's production, as well as third-party purchased volumes.

To assess the performance of Anadarko's operating segments, the chief operating decision maker analyzes Adjusted EBITDAX. The Company defines Adjusted EBITDAX as income (loss) before income taxes; interest expense; exploration expense; depreciation, depletion, and amortization (DD&A); impairments; Deepwater Horizon settlement and related costs; Algeria exceptional profits tax settlement; Tronox-related contingent loss; unrealized (gains) losses on derivatives, net; and realized (gains) losses on interest-rate and other derivatives, net, less net income attributable to noncontrolling interests. The Company's definition of Adjusted EBITDAX excludes interest expense to allow for assessment of segment operating results without regard to Anadarko's financing methods or capital structure. Adjusted EBITDAX also excludes exploration expense, as it is not an indicator of operating efficiency for a given reporting period. However, exploration expense is monitored by management as part of costs incurred in exploration and development activities. Similarly, DD&A and impairments are excluded from Adjusted EBITDAX as a measure of segment operating performance because capital expenditures are evaluated at the time capital costs are incurred. Anadarko's definition of Adjusted EBITDAX excludes Deepwater Horizon settlement and related costs, Algeria exceptional profits tax settlement, and Tronox-related contingent loss, as these costs are outside the normal operations of the Company.See Note 11—Contingencies.Finally, unrealized (gains) losses on derivatives, net and realized (gains) losses on interest-rate and other derivatives, net are excluded from Adjusted EBITDAX because these (gains) losses are not considered a measure of asset operating performance. Management believes that the presentation of Adjusted EBITDAX provides information useful in assessing the Company's financial condition and results of operations and that Adjusted EBITDAX is a widely accepted financial indicator of a company's ability to incur and service debt, fund capital expenditures, and make distributions to stockholders.

Adjusted EBITDAX, as defined by Anadarko, may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) attributable to common stockholders and other performance measures, such as operating income or cash flows from operating activities. Below is a reconciliation of consolidated Adjusted EBITDAX to income (loss) before income taxes:

	Three Months Ended
	March 31,
millions	2013		2012
Income (loss) before income taxes	$	940	$	2,535
Exploration expense		264		244
DD&A		1,022		930
Impairments		29		50
Deepwater Horizon settlement and related costs		3		8
Algeria exceptional profits tax settlement		33		(1,804)
Tronox-related contingent loss		—		275
Interest expense		164		186
Unrealized (gains) losses on derivatives, net		246		(142)
Less net income attributable to noncontrolling interests		24		27
Consolidated Adjusted EBITDAX	$	2,677	$	2,255

Information presented below as “Other and Intersegment Eliminations” includes results from hard-minerals royalty arrangements and corporate, financing, and certain hedging activities. The following summarizes selected financial information for Anadarko's reporting segments:

		Oil and Gas						Other and
		Exploration						Intersegment
millions		& Production		Midstream		Marketing		Eliminations		Total
Three Months Ended March 31, 2013
Sales revenues		$	1,541	$	84	$	2,093	$	—	$	3,718
Intersegment revenues			1,862		253		(1,966)		(149)		—
Gains (losses) on divestitures and other, net			4		—		—		171		175
	Total revenues and other		3,407		337		127		22		3,893
Operating costs and expenses (1)			881		188		164		20		1,253
Realized (gains) losses on commodity
	derivatives, net		—		—		—		(51)		(51)
Other (income) expense, net (2)			—		—		—		(6)		(6)
Net income attributable to
	noncontrolling interests		—		24		—		—		24
	Total expenses and other		881		212		164		(37)		1,220
Unrealized (gains) losses on derivatives, net
	included in marketing revenue		—		—		4		—		4
Adjusted EBITDAX		$	2,526	$	125	$	(33)	$	59	$	2,677
Three Months Ended March 31, 2012
Sales revenues		$	1,899	$	87	$	1,426	$	—	$	3,412
Intersegment revenues			1,174		249		(1,295)		(128)		—
Gains (losses) on divestitures and other, net			(17)		(1)		—		53		35
	Total revenues and other		3,056		335		131		(75)		3,447
Operating costs and expenses (1)			926		189		154		48		1,317
Realized (gains) losses on commodity
	derivatives, net		—		—		—		(137)		(137)
Other (income) expense, net (2)			—		—		—		(10)		(10)
Net income attributable to
	noncontrolling interests		—		27		—		—		27
	Total expenses and other		926		216		154		(99)		1,197
Unrealized (gains) losses on derivatives, net
	included in marketing revenue		—		—		5		—		5
Adjusted EBITDAX		$	2,130	$	119	$	(18)	$	24	$	2,255

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(1) Operating costs and expenses excludes exploration expense, DD&A, impairments, Deepwater Horizon settlement and related costs, and Algeria exceptional profits tax settlement since these expenses are excluded from Adjusted EBITDAX.

(2) Other (income) expense, net excludes Tronox-related contingent loss since this expense is excluded from Adjusted EBITDAX.