Analysis of Debt
Total Debt (Carrying Amount)
Anadarko Petroleum Corp., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Short-term Debt
- The short-term debt exhibits significant fluctuations over the analyzed period. It was absent in the 2012 and 2014 years, indicating no reported short-term borrowings during those periods. However, in 2013, short-term debt sharply rose to $500 million, followed by a considerable decrease to $33 million in 2015. By 2016, there was a slight increase to $42 million. This pattern suggests intermittent reliance on short-term financing, with a peak in 2013 and a subsequent decline.
- Long-term Debt, Excluding Current Portion
- The long-term debt, excluding the current portion, shows a generally increasing trend over the five-year period. Starting at $13,269 million in 2012, it slightly decreased in 2013 to $13,065 million but then substantially increased to $15,092 million in 2014. The upward trend continued in 2015, reaching $15,718 million, before a small decrease to $15,281 million in 2016. This indicates a general expansion in long-term obligations, with minor fluctuations in the later years.
- Total Debt (Carrying Amount)
- Total debt follows a pattern similar to long-term debt but incorporates the short-term components. It started at $13,269 million in 2012, increasing to $13,565 million in 2013 coinciding with the rise in short-term debt that year. The debt continued to climb to $15,092 million in 2014, and further to a peak of $15,751 million in 2015. In 2016, total debt decreased slightly to $15,323 million. The overall pattern indicates an increasing total debt burden through 2015, with a modest reduction observed in the final year examined.
Total Debt (Fair Value)
| Dec 31, 2016 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Total debt (fair value) | 17,100) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 1.12 |
Based on: 10-K (reporting date: 2016-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 5.87%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 7.05% | 114) | 8) | |
| 2.60% | 350) | 9) | |
| 6.95% | 300) | 21) | |
| 8.70% | 600) | 52) | |
| 4.85% | 800) | 39) | |
| 5.38% | 500) | 27) | |
| 4.00% | 670) | 27) | |
| 3.45% | 625) | 22) | |
| 6.95% | 650) | 45) | |
| 3.95% | 500) | 20) | |
| 4.65% | 500) | 23) | |
| 5.55% | 1,100) | 61) | |
| 7.50% | 112) | 8) | |
| 7.00% | 54) | 4) | |
| 7.13% | 150) | 11) | |
| 6.63% | 17) | 1) | |
| 7.15% | 235) | 17) | |
| 7.20% | 135) | 10) | |
| 7.95% | 117) | 9) | |
| 7.50% | 900) | 68) | |
| 7.88% | 500) | 39) | |
| 5.24% | 2,360) | 124) | |
| 6.45% | 1,750) | 113) | |
| 7.95% | 325) | 26) | |
| 6.20% | 750) | 47) | |
| 4.50% | 625) | 28) | |
| 5.45% | 600) | 33) | |
| 6.60% | 1,100) | 73) | |
| 7.73% | 61) | 5) | |
| 7.50% | 78) | 6) | |
| 7.25% | 49) | 4) | |
| Total | 16,627) | 977) | |
| 5.87% | |||
Based on: 10-K (reporting date: 2016-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 977 ÷ 16,627 = 5.87%
Interest Costs Incurred
Anadarko Petroleum Corp., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Interest Expense
- The interest expense displayed a generally increasing trend over the five-year period. Starting at $742 million in 2012, it decreased slightly in 2013 to $686 million, but then showed a steady increase each subsequent year, reaching $890 million by 2016. This indicates a rising cost of interest payments excluding capitalized interest over time.
- Capitalized Interest
- The amount of capitalized interest demonstrated a declining trend from 2013 onwards. It increased from $221 million in 2012 to a peak of $263 million in 2013. After this peak, capitalized interest dropped markedly each year, reaching $132 million in 2016. This decrease suggests a reduction in the portion of interest costs that were added to the asset costs rather than expensed immediately.
- Interest Costs Incurred
- Total interest costs incurred, which include both interest expense and capitalized interest, increased gradually throughout the period. Starting at $963 million in 2012, the figure saw minor fluctuations but maintained an upward trajectory, ending at $1,022 million in 2016. The increase was steady but less pronounced compared to the interest expense alone due to the decreasing capitalized interest.
- Summary Insights
- The data reveals that while the company's total interest cost obligations have increased steadily, the composition of these costs has shifted. Interest expense has risen consistently since 2013, indicating increasing interest payments charged directly to the income statement. Conversely, capitalized interest has declined, reflecting potentially lower investments in capital projects or changes in capitalization policies. Overall, the increase in total interest costs combined with the decline in capitalized interest points to growing operational interest burdens, which could affect profitability metrics and cash flow management.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
2016 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= -2,939 ÷ 890 = -3.30
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= -2,939 ÷ 1,022 = -2.88
- Interest Coverage Ratio (without capitalized interest)
-
This ratio shows a significant declining trend over the five-year period. Beginning at a robust level of 5.8 in 2012, the ratio decreased steadily to 4.07 in 2013 and further dropped sharply to 1.07 in 2014. The trend continued into negative territory in 2015 with -10.74 and remained negative at -3.3 in 2016. This indicates a worsening ability to cover interest expenses from operating earnings over time, culminating in substantial financial stress in the latter years.
- Adjusted Interest Coverage Ratio (with capitalized interest)
-
The adjusted ratio, which accounts for capitalized interest, parallels the decline observed in the unadjusted ratio but remains consistently lower. Starting from 4.47 in 2012, the ratio fell to 2.94 in 2013 and then to 0.85 in 2014, reflecting diminished financial flexibility. From 2015 onward, the ratio turned sharply negative, reaching -8.96 and then -2.88 in 2016. The negative values further underscore deteriorating earnings relative to interest obligations when capitalized interest is considered.
- Overall Analysis
-
Both interest coverage ratios reflect a clear and concerning downward trajectory throughout the period. The movement into negative territory in the final two years signals operational difficulties impacting the company's ability to service debt. The parallel trends between the adjusted and unadjusted ratios suggest that capitalized interest has an adverse effect but does not alter the overall decline. This pattern points to increased financial risk and potential liquidity challenges during the later years under review.