ANADARKO PETROLEUM CORP 10-K (Annual Reports) 2009-02-25

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
or
® TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-8968
ANADARKO PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)
Delaware 76-0146568
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046
(Address of principal executive offices)
Registrant’s telephone number, including area code (832) 636-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $0.10 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ® .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ® No x .
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No ® .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ® .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer x Accelerated filer ® Non-accelerated filer ® Smaller reporting company ® .
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ® No x .
The aggregate market value of the Company’s common stock held by non-affiliates of the registrant on June 30, 2008 was $34.9 billion
based on the closing price as reported on the New York Stock Exchange.
The number of shares outstanding of the Company’s common stock as of January 30, 2009 is shown below:
Title of C lass Nu m be r of S h are s O u tstan ding
Common Stock, par value $0.10 per share 459,881,004
Part of
Form 10-K Docu m e n ts In corporate d By Re fe re n ce
Part III Portions of the Proxy Statement for the Annual Meeting of Stockholders of Anadarko Petroleum Corporation to be
held May 19, 2009 (to be filed with the Securities and Exchange Commission prior to April 9, 2009).
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Table of Contents
TABLE OF CONTENTS
Page
PART I
Items 1 and 2. Business and Properties 2
General 2
Oil and Gas Properties and Activities 3
Proved Reserves 3
Sales Volumes and Prices 4
Properties and Activities—United States 6
Properties and Activities—Algeria 12
Properties and Activities—Other International 13
Drilling Programs 14
Drilling Statistics 14
Productive Wells 15
Properties and Leases 15
Midstream Properties and Activities 15
Marketing Activities 16
Segment and Geographic Information 17
Employees 17
Regulatory Matters, Environmental and Additional Factors Affecting Business 17
Title to Properties 17
Capital Spending 17
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends 17
Item 1A. Risk Factors 18
Item 1B. Unresolved Staff Comments 26
Item 3. Legal Proceedings 26
Item 4. Submission of Matters to a Vote of Security Holders 27
Executive Officers of the Registrant 27
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29
Item 6. Selected Financial Data 31
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 66
Item 8. Financial Statements and Supplementary Data 68
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139
Item 9A. Controls and Procedures 139
Item 9B. Other Information 139
PART III
Item 10. Directors, Executive Officers and Corporate Governance 139
Item 11. Executive Compensation 140
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 140
Item 13. Certain Relationships and Related Transactions, and Director Independence 140
Item 14. Principal Accounting Fees and Services 140
PART IV
Item 15. Exhibits, Financial Statement Schedules 141
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PART I
Items 1 and 2. Business and Properties

General
Anadarko Petroleum Corporation is among the largest independent oil and gas exploration and production companies in the world, with
2.28 billion barrels of oil equivalent (BOE) of proved reserves as of December 31, 2008. Anadarko’s primary business segments are vertically
integrated within the oil and gas industry. These segments are managed separately because of the nature of their products and services, as
well as unique technology, distribution and marketing requirements. The Company’s three operating segments are:
Oil and gas exploration and production – This segment explores for and produces natural gas, crude oil, condensate and natural gas
liquids (NGLs). The Company’s major areas of operation are located onshore in the United States, the deepwater of the Gulf of Mexico
and Algeria. Anadarko also has production in China and is executing strategic exploration programs in several other countries, including
Ghana and Brazil.
Midstream – This segment engages in gathering, processing, treating and transporting Anadarko and third-party oil and gas production.
The Company owns and operates natural gas gathering, treating and processing systems in the United States.
Marketing – This segment sells most of Anadarko’s production, as well as commodities purchased from third parties. The Company
actively markets natural gas, oil and NGLs in the United States, and actively markets oil from Algeria and China.
The Company also has hard minerals properties that contribute to operating income through non-operated joint ventures and royalty
arrangements in several coal, trona (natural soda ash) and industrial mineral mines located on lands within and adjacent to its Land Grant
holdings. The Land Grant is an 8 million acre strip running through portions of Colorado, Wyoming and Utah and is where the Company owns
most of its fee mineral rights. Anadarko is committed to minimizing its impact on the environment from exploration and production activities of
its worldwide operations through programs such as carbon dioxide (CO2) sequestration and the reduction of surface area used for production
facilities.
On August 10, 2006, Anadarko completed the acquisition of Kerr-McGee Corporation (Kerr-McGee) in an all-cash transaction totaling
$16.5 billion, plus the assumption of approximately $2.6 billion in debt. On August 23, 2006, Anadarko completed the acquisition of Western
Gas Resources, Inc. (Western) in an all-cash transaction totaling $4.8 billion plus the assumption of $625 million in debt. As part of an asset
realignment associated with the acquisitions, the Company sold its wholly-owned Canadian oil and gas subsidiary, Anadarko Canada
Corporation, in November 2006 for approximately $4 billion. Anadarko also divested, in 2007 and 2006, certain properties onshore in the United
States, in the Gulf of Mexico and Qatar for total proceeds of approximately $13 billion before income taxes. The proceeds from these
transactions were used to reduce debt.
In 2008, Anadarko divested certain properties in Brazil, onshore in the United States and the Gulf of Mexico for total proceeds of $2.5
billion before income taxes. Proceeds from these divestitures were used primarily to reduce debt by $2.4 billion in 2008. For additional
information, see Acquisitions and Divestitures and Outlook under Item 7 of this Form 10-K.
During 2007, Anadarko changed its method of accounting for its oil and gas exploration and development activities from full cost to the
successful efforts method. All financial information presented for prior periods has been recast to reflect retrospective application of the
successful efforts method.
Unless the context otherwise requires, the terms “Anadarko” or “Company” refer to Anadarko Petroleum Corporation and its
consolidated subsidiaries. The Company’s corporate headquarters is located at 1201 Lake Robbins Drive, The Woodlands, Texas 77380, where
the telephone number is (832) 636-1000. Additionally, unless noted otherwise, the following information relates to Anadarko’s continuing
operations and excludes the discontinued Canadian operations. For additional information, see Note 1—Summary of Significant Accounting
Policies of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
Available Information The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
registration statements and other items with the Securities and Exchange
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Commission (SEC). Anadarko provides access free of charge to all of these SEC filings, as soon as reasonably practicable after filing or
furnishing, on its internet site located at www.anadarko.com. The Company will also make available to any stockholder, without charge, copies
of its Annual Report on Form 10-K as filed with the SEC. For copies of this, or any other filing, please contact: Anadarko Petroleum
Corporation, Investor Relations Department, P.O. Box 1330, Houston, Texas 77251-1330 or call (832) 636-1216.
In addition, the public may read and copy any materials Anadarko files with the SEC at the SEC’s Public Reference Room at 100 F Street,
N.E., Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. The SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information statements and other
information regarding issuers, like Anadarko, that file electronically with the SEC.
Oil and Gas Properties and Activities

Proved Reserves
As of December 31, 2008, Anadarko had proved reserves of 8.1 trillion cubic feet (Tcf) of natural gas and 0.9 billion barrels of crude oil,
condensate and NGLs. Combined, these proved reserves are equivalent to 2.28 billion barrels of oil or 13.7 Tcf of natural gas. Excluding the
effect of divestitures, the Company’s proved reserves increased during 2008 by approximately 188 million barrels of oil equivalent (MMBOE).
During 2008, sales of proved reserves in place totaled 137 MMBOE. Reserve additions were primarily driven by successful drilling in the
Rockies and developments and appraisals in the deepwater Gulf of Mexico and positive revisions associated with successful infill drilling
onshore in the United States and the Peregrino heavy-oil field, offshore Brazil, which was sold in 2008. These positive revisions were partially
offset by a decrease in prices for oil and NGLs. As of December 31, 2008, Anadarko had proved developed reserves of 6.1 Tcf of natural gas
and 580 million barrels (MMBbls) of crude oil, condensate and NGLs. Proved developed reserves comprise 70% of total proved reserves.
Evaluation and Review Anadarko’s estimates of proved reserves and associated future net cash flows as of December 31, 2008 were
made solely by the Company’s engineers and are the responsibility of management. The procedures and methods used in preparing the
Company’s estimates of proved reserves and future net cash flows, as of December 31, 2008, were reviewed by an independent engineering
firm, Miller and Lents, Ltd. (M&L). The purpose of the review was to determine that procedures and methods used by Anadarko to estimate its
proved reserves were based on generally accepted engineering and evaluation principles and are in accordance with definitions contained in
the rules of the SEC. In each review, Anadarko’s technical staff presented M&L with an overview of the data, methods and assumptions used
in its reserve estimates. The data presented included pertinent seismic information, geologic maps, well logs, production tests, material balance
calculations, reservoir simulation models, well performance data, operating procedures and relevant economic criteria. Subsequent to the
reviews, M&L was provided with additional data and information that was requested in certain instances to satisfy M&L that the procedures
and methods used were in accordance with standard industry practice. Management’s intent in retaining M&L to review its procedures and
methods is to provide for objective third-party input on these procedures and methods and to gather industry information applicable to its
reserve estimation and reporting process.
The Company’s estimates of proved reserves, proved developed reserves and proved undeveloped reserves (PUDs) at December 31,
2008, 2007 and 2006 and changes in proved reserves during the last three years are contained in the Supplemental Information on Oil and Gas
Exploration and Production Activities—Unaudited (Supplemental Information) in the Consolidated Financial Statements under Item 8 of
this Form 10-K. Additional information with respect to the Company’s methods and procedures employed in the reserve estimation process,
are also found in the Supplemental Information. The Company files annual estimates of certain proved oil and gas reserves with the U.S.
Department of Energy, which are within 5% of the amounts included in the above estimates.
In December 2008, the SEC released the final rule for “Modernization of Oil and Gas Reporting” (Modernization). The Modernization
disclosure requirements will permit reporting of oil and gas reserves using an average price based upon the prior 12-month period rather than
year-end prices and the use of new technologies to determine proved reserves, if those technologies have been demonstrated to result in
reliable
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conclusions about reserves volumes. Companies will also be allowed to disclose probable and possible reserves in SEC filed documents. In
addition, companies will be required to report the independence and qualifications of its reserves preparer or auditor and file reports when a
third party is relied upon to prepare reserves estimates or conduct a reserves audit. The Modernization disclosure requirements become
effective for Anadarko’s Annual Report on Form 10-K for the year ended December 31, 2009. The SEC is coordinating with the Financial
Accounting Standards Board to obtain the revisions necessary to provide consistency with the Modernization. In the event that consistency
is not achieved in time for companies to comply with the Modernization, the SEC will consider delaying the compliance date.
Also contained in the Supplemental Information in the Consolidated Financial Statements are the Company’s estimates of future net
cash flows and discounted future net cash flows from proved reserves. See Operating Results and Critical Accounting Policies and
Estimates under Item 7 of this Form 10-K for additional information on the Company’s proved reserves.
Sales Volumes and Prices

The following table shows the Company’s annual sales volumes from continuing operations. Sales volumes for 2007 include
approximately 15 MMBOE associated with properties that were divested during 2007. Volumes for natural gas are in billions of cubic feet (Bcf)
at a pressure base of 14.73 pounds per square inch. For the computation of BOE, six thousand cubic feet (Mcf) of gas is the energy equivalent
of one barrel of oil, condensate or NGLs.
Sales Volumes
2008 2007 2006

United States
Natural gas (Bcf) 750 698 558
Oil and condensate (MMBbls) 40 48 39
Natural gas liquids (MMBbls) 14 16 15
Total (MMBOE) 179 180 147
Algeria
Other International
Total (MMBOE) 6 7 8
Total
Natural gas (Bcf) 750 698 558
Natural gas liquids (MMBbls) 14 16 15
The following table shows the Company’s annual average sales prices and average production costs from continuing operations. The
impact on average sales prices from derivative instruments, which the Company utilizes to manage price risk related to the Company’s sales
volumes, is shown separately in the table. Natural gas sales and oil and condensate sales include net unrealized gains (losses) related to these
derivatives of $372 million and $520 million for 2008, $(395) million and $(653) million for 2007 and $579 million and $258 million for 2006,
respectively. Production costs are costs incurred to operate and maintain the Company’s wells and related equipment and include cost of
labor, well service and repair, location maintenance, power and fuel, transportation, cost of product, property taxes, production and severance
taxes and production related general and administrative costs. Additional information on volumes, prices, production costs and markets is
contained in Financial Results and Marketing Strategies under Item 7 of this Form 10-K. Additional detail of production costs is contained in
the Supplemental Information under Item 8 of this Form 10-K. Information on major customers is contained in Note 18—Major Customers of
the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
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Sales Prices and Production Costs
2008 2007 2006

United States
Sales price
Natural gas price per Mcf, excluding derivatives $ 7.65 $ 5.74 $ 6.14
Realized gains (losses) on derivatives 0.19 0.73 0.33
7.84 6.47 6.47
Unrealized gains (losses) on derivatives 0.50 (0.57) 1.03
Total $ 8.34 $ 5.90 $ 7.50
Oil and condensate price per barrel, excluding derivatives $ 96.20 $ 66.64 $59.41
Realized gains (losses) on derivatives (8.15) 1.35 2.64
88.05 67.99 62.05
Total $ 96.23 $ 57.24 $68.59
Natural gas liquids price per barrel, excluding derivatives $ 56.11 $ 45.87 $39.71
Realized gains (losses) on derivatives — 0.03 (0.13)
56.11 45.90 39.58
Unrealized gains (losses) on derivatives — — —
Total $ 56.11 $ 45.90 $39.58
Total $ 60.82 $ 42.13 $50.77
Production cost per BOE $ 13.81 $ 11.14 $10.76
Algeria
Sales price
Realized gains (losses) on derivatives (5.86) — —
93.13 75.50 65.55
Unrealized gains (losses) on derivatives 9.14 (5.91) —
Total $102.27 $ 69.59 $65.55
Production cost per BOE $ 35.20 $ 34.13 $ 7.48
Other International
Sales price
Oil and condensate price per barrel $ 85.51 $ 59.91 $48.58
Total
Sales price
Natural gas price per Mcf, excluding derivatives $ 7.65 $ 5.74 $ 6.14
Realized gains (losses) on derivatives 0.19 0.73 0.33
7.84 6.47 6.47
Total $ 8.34 $ 5.90 $ 7.50
Realized gains (losses) on derivatives (6.72) 0.82 1.48
89.43 69.50 61.76
Total $ 97.21 $ 61.19 $65.43
Natural gas liquids price per barrel, excluding derivatives $ 56.11 $ 45.87 $39.71
Realized gains (losses) on derivatives — 0.03 (0.13)
56.11 45.90 39.58
Unrealized gains (losses) on derivatives — — —
Total $ 56.11 $ 45.90 $39.58
Total $ 65.75 $ 45.81 $52.63
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Properties and Activities—United States

Overview Anadarko’s active areas in the United States include the Lower 48 states, Alaska and the deepwater Gulf of Mexico. Reserves in the
United States comprised 90% of Anadarko’s total proved reserves at year-end 2008. During 2008, the Company’s drilling efforts in the United
States resulted in 2,645 natural gas wells, 149 oil wells and 19 dry holes. The accompanying maps illustrate the locations of Anadarko’s
domestic onshore and offshore oil and gas producing operations.
The following table presents selected 2008 United States operating data by area.
Ne t
Ne t Sale s Volum e s Drillin g S tatistics
Prove d
Natural O il an d Re se rve s
Gas NGLs Total at Ye ar En d Produ cin g W e lls S u cce ss Nature of
(MMcf/d) (MBbls/d) (MBO E/d) (MMBO E) W e lls (1) Drille d(2) Rate Inte re st (3)
Rockies:
T ight Gas
-Greater Natural Buttes 250 4 46 287 2,337 353 100.0% W
-Wattenberg 171 19 48 258 4,520 385 100.0% W/R
-Wamsutter and Moxa 146 11 35 157 2,901 383 100.0% W/R
-Pinedale 70 1 13 98 897 463 100.0% W
Enhanced Oil Recovery 3 12 12 160 1,378 34 100.0% W
Coalbed Methane 377 — 63 165 9,799 839 100.0% W
Other 7 — 1 40 196 — n/a W/R
1,024 47 218 1,165 22,028 2,457 100.0%
Southern Region:
Bossier 150 — 25 148 879 22 100.0% W
Carthage 85 5 19 121 1,616 121 97.5% W/R
Haley 91 — 16 40 159 26 92.3% W
Ozona 38 1 7 57 2,332 52 100.0% W
Austin Chalk 43 12 19 31 687 25 84.0% W/R
Other 146 8 32 139 2,365 92 94.5% W/R
553 26 118 536 8,038 338 95.8%
T otal Onshore—Lower 48 States 1,577 73 336 1,701 30,066 2,795 99.5%
Alaska — 19 19 51 257 11 82.0% W
Gulf of Mexico 472 55 134 291 212 7 57.0% W/R
T otal United States 2,049 147 489 2,043 30,535 2,813 99.3%
(1) Gross number of wells in which Anadarko has an interest.
(2) Includes 2,788 gross development wells with a 99.6% success rate and 25 gross exploration wells with a 64.0% success rate.
(3) W = Working, R = Royalty
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LOGO
Anadarko
P etroleum Corporation
ONSHORE P RODUCING PROPERT IES
ROCKIES
MONT ANA
P owder River Basin
NORT H DAKOT A
IDAHO
WYOMING
P inedale
Moxa
EOR
CBM
Wamsutter
CBM
SOUT H DAKOT A
UT AH
Greater Natural Buttes
CBM
COLORADO
DENVER
Wattenberg
SOUT HERN REGION
NEBRASKA
KANSAS
Hugoton
ARIZONA
NEW MEXICO
OKLAHOMA
ARKANSAS
T EXAS
Carthage
Haley
Ozona
South T exas
Bossier
Austin Chalk
T HE WOODLANDS
MISSISSIPP I
LOUISIANA
GAS FIELD (CONT AINS OPERAT ED WELLS)
OIL FIELD (CONT AINS OPERAT ED WELLS)
LAND GRANT
CORP ORAT E OFFICES
ALASKA
Colville River Unit
Note: Alaska not to scale
ACREAGE LOWER 48 ALASKA
UNDEVELOPED LEASEHOLD (Net) 2,969,868 1,231,683
DEVELOPED LEASEHOLD (Net) 3,151,048 8,448
FEE MINERAL (Net) 8,322,277 7,978
JANUARY 2009
N SCALE 0 100MI. 200MI.
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Onshore—Lower 48 States At the end of 2008, about 75% of the Company’s proved reserves were located onshore in the Lower 48 states.
The Company has allocated approximately 45% of the 2009 capital budget to the Lower 48 states. Of this amount, approximately 65% is
allocated to the Rockies and approximately 35% is allocated to the Southern Region.
Rockies Anadarko’s properties in the Rockies are located in Colorado, Utah and Wyoming with a primary focus on natural gas plays.
Anadarko is a large independent operator of tight gas and CBM natural gas assets as well as an operator of enhanced oil recovery (EOR)
projects within the region.
Tight gas assets include the Greater Natural Buttes, Wattenberg, Wamsutter and Moxa fields. Pinedale is also a non-operated asset
within Anadarko’s tight gas portfolio in the Rockies.
In the Greater Natural Buttes field, located in the Uinta basin of northeast Utah, the Company continues to be primarily focused on
development of the Wasatch and Mesa Verde formations through infill drilling operations and drilling additional wells adjacent to existing
producing wells. Anadarko operates approximately 1,500 wells in the Greater Natural Buttes field area and has an interest in approximately 900
non-operated wells. In 2009, Anadarko plans to maintain an active drilling program in this area.
The Wattenberg natural gas and condensate field is located in the Denver-Julesburg basin in northeast Colorado on a portion of the
Land Grant. Development activities in 2008 included infill drilling, re-completions, and re-fracture stimulations of pre-existing wells. The Land
Grant affords the Company royalty revenues on many of the operated and non-operated wells in this and other fields. Anadarko operates
approximately 4,200 wells and has an interest in approximately 300 non-operated wells in the Wattenberg field. In 2009, the Company expects to
have several active drilling and workover rigs in the area.
Anadarko was active in the Wamsutter and Moxa tight gas fields in 2008, which are located in the Greater Green River basin (GGRB) area
of southern Wyoming. Both fields are also on the Wyoming portion of the Land Grant which provides Anadarko with royalty revenues. The
Company further benefits from the success of numerous third-party operators on the Wyoming portion of the Land Grant acreage and actively
pursues farm-out projects to capture incremental royalty revenues in the GGRB from exploration and development activity. Anadarko operates
approximately 700 wells and has an interest in approximately 2,200 non-operated wells in the Wamsutter and Moxa fields.
The Company’s non-operated Pinedale asset is located in the GGRB in southwest Wyoming. The gas produced at Pinedale is
transported through Company-owned gathering systems that deliver gas to an Anadarko processing facility located on the Land Grant.
Anadarko has an interest in approximately 900 producing wells in the Pinedale field.
During 2008, the Company continued to pursue the phased development of the Rockies EOR assets at the Salt Creek, Monell and Sussex
areas in Wyoming. Each area has demonstrated year-over-year increases in production due to CO2 injection operations. The Company expects
that phased development will continue in 2009 for these assets.
The Company’s CBM operations are primarily located in the Powder River basin in northeast Wyoming, but include activity on the
Wyoming portion of the Land Grant at the Atlantic Rim in southern Wyoming, and in the Helper and Clawson fields in Utah. Anadarko
operates approximately 4,600 shallow low-cost CBM wells and has an interest in approximately 5,200 outside-operated CBM wells in the
Rockies.
Southern Region Anadarko’s properties in the Southern Region are located primarily in Texas with a focus on natural gas plays. During 2008,
production and development activities at the Company’s properties in the east Texas area were concentrated in the Bossier and Carthage areas
with the Company drilling 22 wells in the Bossier area and 121 wells in the Carthage area. In 2009, Anadarko plans to reduce activity in the
Bossier and Carthage areas. Anadarko’s east Texas Austin Chalk activity continues to focus on horizontal drilling in Tyler and Jasper
counties. Anadarko drilled 25 wells in 2008 in this area. In 2009, the Company plans to remain active with the continued extension of field
boundaries and drilling infill development wells to optimize well spacing in this area.
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Operations in west Texas are concentrated on increasing production and reserves in the tight gas play of the Haley field. During 2007,
the Company entered into a joint venture on a portion of the Haley field to reduce risk and increase acreage in the basin. The joint venture
drilled 26 wells in 2008. Anadarko also drilled 52 wells in the Ozona field, which is located in the west Texas area, in 2008.
Other areas in the Southern Region include properties in South Texas and in the Hugoton field. In South Texas, the Company had an
active drilling program in Starr and Hidalgo counties during 2008. The Hugoton field in southern Kansas continues to be a long-life, slow-
decline asset for Anadarko with over 1,200 producing gas wells.
Exploration Anadarko’s exploration program in the Southern Region is concentrated in Texas, Pennsylvania and Mississippi. Anadarko was
successful in 13 of 18 exploratory wells in six different plays in these areas during 2008, with focus on shale gas, tight sands and fractured
carbonate plays. Anadarko has completed a number of these wells in the Maverick basin and the Haynesville shale play in Texas, and the
Marcellus shale play in Pennsylvania. The Company plans to explore and delineate these areas in 2009.
Alaska Anadarko’s activity in Alaska is concentrated primarily on the North Slope. Approximately 2% of the Company’s proved reserves at
year-end 2008 were in Alaska. During 2008, development activity at the Colville River Unit (22% WI) was focused on new development at the
Qannik field and continued drilling at the Alpine, Fiord and Nanuq fields. First production from Qannik was achieved in July 2008. During 2009,
the Company anticipates that development planning will lead to the sanction of the Alpine West field. In 2009, the Company expects to
continue to participate in exploration drilling in Alaska.
Gulf of Mexico At year-end 2008, about 13% of the Company’s proved reserves were located offshore in the deepwater Gulf of Mexico where
Anadarko owns an average 64% working interest in 596 blocks and has access to an additional 22 blocks through participation agreements.
The Company holds interests in 26 producing fields and is in the process of developing two additional fields in the area. Anadarko has
allocated approximately 20% of the capital budget to the deepwater Gulf of Mexico for 2009.
Independence Hub The Independence Hub, located in approximately 8,000 feet of water, began production in July 2007. Anadarko operates
the facility, which is owned by third parties. The facility, capable of processing nearly 1 Bcf of gas per day, serves several ultra-deepwater
natural gas fields, including eight field discoveries operated by Anadarko. Anadarko’s working interests in these fields range from 20% to
100%. Production is from 16 wells, of which Anadarko has an interest in 15. During 2008, Anadarko successfully drilled one development well
(100% WI) in the area. In 2009, the Company plans to drill two to four additional development wells in the area.
Marco Polo/K2 complex Anadarko operates, and a third party owns, the platform and production facilities for the Marco Polo deepwater
development project. Six K2 subsea wells (42% WI) are tied-back to the Marco Polo platform, where four Marco Polo field wells (100% WI) are
also producing. In 2008, the Company drilled a down-dip K2 field delineation well and three sidetrack wells. During 2009, the Company plans to
drill one K2 well to test the southern portion of the field, and to complete two K2 wells later in the year. Two wells were completed in the
Marco Polo field in 2008. The fields have had limited production since September 2008 because of damage caused by Hurricane Ike to the
third-party-owned gas export pipelines that connect the platform to the shelf infrastructure. Production is expected to resume in the first half of
2009.
Constitution/Ticonderoga fields The Constitution field (100% WI) began production in 2006 utilizing a truss spar located in approximately
5,000 feet of water. The Ticonderoga field (50% WI) also began production in 2006 as a subsea tieback to the Constitution spar. During 2008,
additional drilling and completion at Ticonderoga increased the field to three producing wells. Both fields have been shut-in since September
2008 because of damage caused by Hurricane Ike to the third-party-owned gas export pipelines that connect the spar to the shelf
infrastructure. Production is expected to resume in the first half of 2009. The Company is planning to use the Constitution spar as a hub for the
accelerated development of the Caesar/Tonga complex.
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Caesar/Tonga complex (33.75% WI) The Company approved development of the Caesar/Tonga complex in December 2008 as a four-well
subsea tieback to the Constitution spar, and production is expected to start in the first half of 2011. One development well was successfully
drilled in 2008 and additional development drilling is expected in 2009.
Nansen field (50% WI) The Nansen field began production in 2002, and was developed with the world’s first truss spar in 3,700 feet of water.
During 2008, Anadarko completed and tied-back four discoveries in the Northwest Nansen field area to the Nansen spar. Production from
these four wells commenced during early 2008. Also during 2008, Anadarko drilled and completed two subsea wells. Production from both
wells is expected to commence in mid-2009. In 2009, the Company plans to sidetrack and recomplete one subsea well and expects to initiate a
three-well sidetrack or recompletion program with a platform rig.
Boomvang field (East Breaks Blocks 642, 643, and 688 (30% WI), Block 598 (100% WI), and Block 599 (33% WI)) The Boomvang field
began production in 2002 and was developed with a truss spar in 3,450 feet of water. During 2008, the Company drilled a sidetrack well.
Production from this well commenced in early 2008. In 2009, the Company plans to drill one development well in the proximity of the Drysdale
discovery. Production from this well is expected to commence during mid-2009.
Gunnison field (50% WI) The Gunnison field has been producing since 2003 and incorporates a truss spar in 3,100 feet of water. During 2006,
the Dawson Deep discovery began production as a subsea tieback to the Gunnison spar. In 2008, the Company drilled one well and
recompleted two other wells. Gunnison was shut-in after Hurricane Ike because of damage to an onshore third-party-owned processing
facility. Partial production was quickly restored and full production resumed in January 2009. The Company plans to recomplete one well in
2009 and is currently planning a platform-based rig program for late 2009 or 2010.
Red Hawk field (50% WI) The Red Hawk field, located in approximately 5,300 feet of water, began production in 2004 utilizing the world’s first
cell spar designed for developing smaller reservoirs in deepwater basins. During 2007, the Company completed installation of compression
equipment at the spar, which extended the life of the field. During 2008, the Company recompleted one well. However, at the end of 2008, both
wells at Red Hawk had depleted reserves and were shut-in. The Company plans to continue evaluating potential opportunities in and around
the Red Hawk field in 2009.
Power Play field (45% WI) The Power Play field is an Anadarko operated single-well subsea tieback to the Baldpate platform. The well was
completed and tied-back during the second quarter of 2008.
Other The Neptune field (50% WI) is an Anadarko-operated property utilizing the world’s first floating production spar. During 2008, the
Company drilled an appraisal well in the proximity of the Mission Deep discovery (50% WI). Anadarko is currently evaluating its options for
the Mission Deep discovery. In 2008, a fourth well was drilled in the Blind Faith field (non-operated, 25% WI), where a deep-draft semi-
submersible platform was installed and first production was achieved. Other Anadarko non-operated properties include Baldpate (50% WI),
Conger (25% WI), Pompano (25% WI) and Tahiti (3% plus over-riding royalty interest).
Exploration Anadarko’s exploration program in the Gulf of Mexico is currently focused on the extensive middle-to-lower Miocene play within
the central Gulf of Mexico and the developing lower Tertiary play in the western Gulf of Mexico. During 2008, Anadarko participated in two
wells which were still drilling at the end of the year and both resulted in discoveries (Heidelberg and Shenandoah) in early 2009. Anadarko also
drilled two unsuccessful wells in the Gulf of Mexico in 2008. The Company expects to participate in approximately three to four exploration
wells and several delineation wells in the area in 2009.
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LOGO
11
Anadarko
P etroleum Corporation
GULF OF MEXICO PRODUCING PROPERT IES
T EXAS
Houston
LOUISIANA
Lake Charles
New Orleans
MISSISSIPP I
Biloxi
ALABAMA
Mobile
FLORIDA
P ensacola
Nansen
Boomvang
Gunnison
P ower P lay
Conger
Baldpate
Red Hawk
Constitution T iconderoga
T ahiti
K2
Marco P olo
Blind Faith
Independence Hub
P ompano
Neptune
N 0 60 MILES
OP ERAT ED FIELDS/FACILIT IES
NON-OPERAT ED FIELDS/FACILIT IES
ACREAGE
UNDEVELOPED (Net) 1,976,145
DEVELOPED (Net) 170,897
P RODUCING BLOCKS 65
EXPLORAT ORY BLOCKS 531
JANUARY 2009
Table of Contents
Properties and Activities—Algeria

Overview Anadarko is engaged in exploration, development and production activities in Algeria’s Sahara Desert. At the end of 2008, about 9%
of the Company’s proved reserves were located in Algeria where a total of nine fields discovered by the Company were on production. In
2008, net sales volumes from the Company’s properties in Algeria represented 10% of the Company’s total sales volumes. During 2008,
Anadarko participated in 11 development wells with an 82% success rate. During 2009, the Company expects to drill about 10 development
wells, exclusive of water and gas injection wells, in Algeria.
Production and Development On Block 404, production from the HBNS field and its associated satellite fields averaged 139 MBbls/d of oil
(gross) in 2008. Production from the HBN field, which extends from Block 404 into Block 403, averaged 64 MBbls/d of oil (gross) in 2008.
Anadarko is also actively involved in the unitized Ourhoud field, which is located in portions of Block 404, Block 406a and Block 405.
Production from this field averaged 230 MBbls/d of oil (gross) in 2008. Anadarko has an interest in several fields further south on Block 208
where development is expected to occur during the first half of 2009 and initial production is expected to occur in late 2011.
Contracts and Partners Anadarko’s interest in the Production Sharing Agreement (PSA) for Blocks 404 and 208 is 50% before participation at
the exploitation stage by Sonatrach, the national oil and gas company of Algeria. The Company has two partners, each with a 25% interest,
also prior to participation by Sonatrach. Under the terms of the PSA, oil reserves that are discovered, developed and produced are shared by
Sonatrach, Anadarko and its two partners. Sonatrach is responsible for 51% of the development and production costs. Anadarko and its
partners have completed the exploration program on Blocks 404 and 208 and now participates only in development activity on these blocks.
Anadarko and its joint-venture partners funded Sonatrach’s share of exploration costs and are entitled to recover these exploration costs from
production during the development phase.
Anadarko’s operations in Algeria have been governed by the PSA since October 1989. In March 2006, Anadarko received from
Sonatrach a letter purporting to give notice under the PSA that enactment of a law in 2005 (2005 Law) relating to hydrocarbons triggered
Sonatrach’s right under the PSA to renegotiate the PSA in order to re-establish the equilibrium of Anadarko’s and Sonatrach’s interests.
Anadarko and Sonatrach reached an impasse over whether Sonatrach had a right to renegotiate the PSA based on the 2005 Law and entered
into a formal non-binding conciliation process under the terms of the PSA in an attempt to resolve this dispute. The conciliation on the 2005
Law dispute was concluded in 2007 without a definitive resolution. There have been no further developments on the 2005 Law dispute. At this
time, Anadarko is unable to reasonably estimate the economic impact under the PSA if Sonatrach were to succeed in modifying the PSA.
Anadarko and its partners still maintain an exploration license, under a separate production sharing agreement, for Block 403 c/e (67%
interest).
Exceptional Profits Tax In July 2006, the Algerian parliament approved legislation establishing an exceptional profits tax on foreign
companies’ Algerian oil production. In December 2006, implementing regulations regarding this legislation were issued. These regulations
provide for an exceptional profits tax imposed on gross production at rates of taxation ranging from 5% to 50% based on average daily
production volumes for each calendar month in which the price of Brent crude averages over $30 per barrel, retroactively effective to August
2006 production. Uncertainty existed at the time as to whether the exceptional profits tax would apply to the full value of production or only to
the value of production in excess of $30 per barrel.
In January 2007, Sonatrach advised Anadarko that it would begin collecting the exceptional profits tax from Anadarko’s share of
production commencing with March 2007 liftings, including for the prior months since the new tax went into effect. In April 2007, ALNAFT,
the new agency in the Algerian Ministry of Energy and Mines responsible for overseeing the Algerian hydrocarbons industry, issued the
Application Procedure further defining the procedure and conditions under which the exceptional profits tax is applied and the methodology
for its calculation. The Application Procedure and other information supplied by Sonatrach revealed that the exceptional profits tax was being
applied to the full value of production rather than to the amount in excess of $30 per barrel. This was evidenced by changes in the Company’s
crude oil lifting schedule, which was conveyed to Anadarko by Sonatrach. As a result, Anadarko changed the measurement basis for the
exceptional profits tax
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liability in the first quarter of 2007 to reflect the application of the tax to the full value of production. For additional information, see Note
15—Other Taxes of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
At December 31, 2008, Anadarko had 83 MMBbls of PUDs in Algeria, the economics of which are sensitive to the exceptional profits tax.
Anadarko is continuing to evaluate the impact of the exceptional profits tax on the economic viability of its future projects in Algeria, as well
as its legal remedies with regard to the exceptional profits tax.
In response to the Algerian government’s imposition of the exceptional profits tax, the Company has notified Sonatrach of its
disagreement with the collection of the exceptional profits tax. The Company believes that the PSA provides fiscal stability through several of
its provisions that require Sonatrach to pay all taxes and royalties. To facilitate discussions between the parties in an effort to resolve the
dispute, on October 31, 2007, the Company initiated a conciliation proceeding on the exceptional profits tax as provided in the PSA. Any
recommendation issued by a conciliation board (Conciliation Board) arising out of the conciliation proceeding is non-binding on the parties.
The Conciliation Board issued its non-binding recommendation on November 26, 2008, which the Company received on December 1, 2008. On
February 15, 2009, the Company initiated arbitration against Sonatrach with regard to the exceptional profits tax. In conformance with the terms
of the PSA, a notice of arbitration was submitted to Sonatrach.
Properties and Activities—Other International

Overview The Company’s other international oil and gas production and/or development operations are located primarily in China. The
Company has exploration acreage in China, Brazil, Ghana, Indonesia and other selected areas. About 1% of the Company’s proved reserves
were located in these other international locations at year-end 2008. During 2008, net sales volumes from the Company’s other international
properties accounted for 3% of the Company’s total sales volumes. Anadarko drilled 17 wells in 2008 in other international areas. In 2009, the
Company expects to drill about 20 development and 15 exploration wells at various other international locations.
China Anadarko’s development and production project in China straddles Blocks 04/36 and 05/36 in Bohai Bay in approximately 75 feet of
water. Anadarko drilled 11 wells in 2008 in this area. Development drilling and recompletion activity has been ongoing through 2008 and is
anticipated to continue in 2009. Further investment is planned in 2009 on minor facility upgrades. At the end of 2008, net production from
China was approximately 14 MBbls/d of oil. The Company has entered into a joint-venture agreement with the China National Offshore Oil
Company to explore the South China Sea Contract Area 43/11. The joint venture has commenced exploration of Contract Area 43/11. During
2009, the Company plans to drill one deepwater exploration well in the South China Sea.
Brazil Anadarko holds exploration interests in several blocks located offshore in the Campos and Espírito Santo basins. Anadarko drilled two
wells in 2008 in these areas, Wahoo and Serpa. The Serpa well was drilled in the BM-ES-24 block. Although encountering pay in the shallower
pre-salt section, the well was determined to be non-commercial as a stand-alone development at this time. The Company announced the
offshore pre-salt Wahoo discovery in the BM-C-30 block (30% WI) in 2008. Also in 2008, the Company divested its 50-percent interest in the
Peregrino heavy-oil field in the Campos basin. In 2009, Anadarko expects to participate in three to four deepwater exploration and appraisal
wells.
Ghana The Jubilee field was discovered offshore Ghana in 2007 and lies partly in the West Cape Three Points block (non-operated, 31%
interest) and partly in the Deep Tano block (non-operated, 18% interest). In 2008, the Company drilled three additional wells on the blocks. In
2009, the Company and its partners expect to sanction the project and expect the operator to award contracts for a floating production, storage
and offloading vessel and related equipment. The Company also plans to drill up to 11 development wells and to participate in three to five
exploration wells in the two blocks. Production is expected to begin in late 2010.
Indonesia Anadarko has a participating interest in approximately 4.1 million exploration acres in Indonesia through a combination of several
operated and non-operated Production Sharing Contracts. The Company did not participate in any wells in 2008, but plans to participate in two
or three exploration wells in 2009.
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Other Anadarko also has active exploration projects in Mozambique, Liberia, Sierra Leone and several other countries in West Africa, as well
as activities in other potential exploration and new venture areas overseas.
Drilling Programs
The Company’s 2008 drilling program focused on proven and emerging oil and natural gas basins in the United States (Lower 48 states,
Alaska and Gulf of Mexico), Algeria and other countries where it holds acreage. Exploration activity consisted of 28 gross completed wells,
including 21 wells in the Lower 48 states, 2 wells in Alaska, 2 wells offshore in the Gulf of Mexico, 2 wells in Algeria and 1 well in other
international locations. Development activity consisted of 2,810 gross completed wells, which included 2,774 wells in the Lower 48 states, 9
wells in Alaska, 5 wells offshore in the Gulf of Mexico, 11 wells in Algeria and 11 wells in other international locations.
Drilling Statistics
The following table shows the number of oil and gas wells completed in each of the last three years:
Net Exploratory Net Development

Productive Dry Holes Total Productive Dry Holes Total Total
2008
United States 12.1 4.6 16.7 1,566.1 8.0 1,574.1 1,590.8
Algeria — 1.3 1.3 1.3 0.4 1.7 3.0
Other International — 0.3 0.3 3.6 — 3.6 3.9
Total 12.1 6.2 18.3 1,571.0 8.4 1,579.4 1,597.7
2007
United States 18.1 4.2 22.3 902.1 2.4 904.5 926.8
Algeria 0.3 0.5 0.8 0.5 — 0.5 1.3
Total 18.4 8.0 26.4 906.7 2.4 909.1 935.5
2006
United States 37.4 2.3 39.7 831.9 2.2 834.1 873.8
Algeria 0.8 0.8 1.6 1.8 — 1.8 3.4
Total 38.2 5.7 43.9 837.2 2.2 839.4 883.3
The following table shows the number of wells in the process of drilling or in active completion stages and the number of wells
suspended or waiting on completion as of December 31, 2008:
Wells in the process

of drilling or Wells suspended or
in active completion waiting on completion
Exploration Development Exploration Development
United States
Gross 11 678 24 9
Net 6.5 345.1 13.5 6.6
Algeria
Gross — 1 — 14
Net — 0.3 — 2.5
Other International
Gross 4 1 7 —
Net 1.3 0.3 2.8 —
Total
Gross 15 680 31 23
Net 7.8 345.7 16.3 9.1
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Productive Wells
As of December 31, 2008, the Company had an ownership interest in productive wells as follows:
Oil Wells* Gas Wells*

United States
Gross 3,952 26,583
Net 3,022.6 15,929.2
Algeria
Gross 162 —
Net 29.5 —
Other International
Gross 105 —
Net 38.0 —
Total
Gross 4,219 26,583
Net 3,090.1 15,929.2
* Includes wells containing multiple completions as follows:
Gross 371 1,681

Net 343.9 1,373.8
Properties and Leases

The following schedule shows the number of developed lease, undeveloped lease and fee mineral acres in which Anadarko held interests
at December 31, 2008:
Developed Undeveloped
Lease Lease Fee Minerals Total
thousands of acres Gross Net Gross Net Gross Net Gross Net
United States
Onshore—Lower 48 5,612 3,151 5,099 2,970 9,849 8,322 20,560 14,443
Offshore 379 171 3,045 1,979 — — 3,424 2,150
Alaska 59 9 3,667 1,264 16 8 3,742 1,281
Total 6,050 3,331 11,811 6,213 9,865 8,330 27,726 17,874
Algeria* 287 70 215 66 — — 502 136
Other International 62 22 26,163 11,969 — — 26,225 11,991
* Developed acreage in Algeria relates only to areas with an Exploitation License. A portion of the undeveloped acreage in Algeria will be
relinquished in the future consistent with contractual obligations or upon finalization of Exploitation License boundaries.
Midstream Properties and Activities

Anadarko invests in midstream (gathering, treating and processing) facilities to complement its oil and gas operations in regions where
the Company has natural gas production. The Company is better able to manage both the value received for, and cost of, gathering, treating
and processing natural gas through its ownership and operation of these facilities. In addition, Anadarko’s midstream business provides
gathering, treating and processing services for third-party customers, including major and independent producers. Anadarko generates
revenues in its gathering, treating and processing activities through various fee structures that include fixed-rate,
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percent of proceeds, or keep-whole agreements. The Company also processes a portion of its gas at various third-party plants. During 2009,
less than 10% of the Company’s capital budget is allocated to midstream facilities.
In 2006, Anadarko significantly increased the size and scope of its midstream business through the acquisitions of Western and Kerr-
McGee. During 2007, the Company divested control of its interests in two natural gas gathering systems and associated processing plants, in
areas where Anadarko has limited or no oil and gas production, for $1.85 billion. At the end of 2008, Anadarko has 29 systems in seven states
(Wyoming, Colorado, Utah, New Mexico, Kansas, Oklahoma and Texas) located in major onshore producing basins.
During the second quarter of 2008, Western Gas Partners, LP (WES) completed its initial public offering of 20.8 million common units for
net proceeds of $321 million ($343 million less $22 million for underwriting discounts and structuring fees). WES is a Delaware limited
partnership formed by Anadarko to own, operate, acquire and develop midstream assets. Anadarko contributed assets to WES in exchange for
an aggregate 59.6% limited partner interest (consisting of common and subordinated limited partner units) in WES, a 2% general partner
interest and incentive distribution rights (IDRs). IDRs entitle the holder to specified increasing percentages of cash distributions as WES’s
per-unit cash distributions increase. In addition, Anadarko maintains control over the assets owned by WES through sole indirect ownership
of the general partner interests.
On December 19, 2008, WES acquired additional midstream assets from Anadarko for aggregate consideration of $210 million, consisting
of a $175 million note payable to Anadarko and the issuance of 2.6 million common units of WES to Anadarko. In addition, WES issued
additional general partner units to its general partner, a wholly-owned subsidiary of Anadarko, to allow it to maintain its 2% general partner
interest in WES after contribution by Anadarko of its 2% undivided interest in the midstream assets. Anadarko currently holds an aggregate
61.3% limited partner interest in WES.
The following table provides key statistics for Company-owned gathering and processing facilities.
2008
Miles of Average
Gathering Total Throughput
Gathering and Processing Facilities Pipelines Horsepower (MMcf/d)
Hugoton Gathering 2,070 102,260 130
Wattenberg 1,720 71,300 250
Powder River CBM 1,570 414,350 690
Greater Natural Buttes 890 125,180 330
Granger Complex 750 46,130 250
Red Desert Complex 740 64,010 140
Dew Gathering 320 43,170 200
Pinnacle 270 1,270 260
Other 4,390 208,890 1,210
Total 12,720 1,076,560 3,460
Marketing Activities
The Company’s marketing department actively manages the sales of Anadarko’s natural gas, crude oil and NGLs. In marketing its
production, the Company attempts to minimize market-related shut-ins, maximize realized prices, and manage credit risk exposure. The
Company also purchases natural gas, crude oil, condensate and NGLs volumes for resale primarily from partners and producers near
Anadarko’s production. These purchases allow Anadarko to aggregate larger volumes and attract larger, creditworthy customers, which
enables the Company to maximize prices received for the Company’s production and minimize balancing issues with customers and pipelines
during operational disruptions.
The Company sells natural gas under a variety of contracts. The Company has the marketing capability to move large volumes of gas
into and out of the daily gas market to capitalize on price volatility. The Company may also engage in trading activities for the purpose of
generating profits from exposure to changes in market prices of natural gas, crude oil, condensate and NGLs. The Company’s marketing
strategy includes the use of leased natural gas storage facilities, firm transportation contracts and various derivative instruments. However,
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the Company does not engage in market-making practices nor does it trade in any non-energy-related commodities. The Company’s marketing
function does not participate in any energy marketing-related partnerships.
The Company also engages in sales of greenhouse gas emission reduction credits (ERCs) derived from CO2 injection operations in
Wyoming. The Company expects additional sales of ERCs in the future.
Segment and Geographic Information

For additional information on operations by segment and geographic location, see Note 19—Segment and Geographic Information of
the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
Employees
As of December 31, 2008, the Company had approximately 4,300 employees. Anadarko considers its relations with its employees to be
satisfactory. The Company has had no significant work stoppages or strikes associated with its employees.
Regulatory Matters, Environmental and Additional Factors Affecting Business

See Risk Factors under Item 1A and Environmental under Item 7 of this Form 10-K.
Title to Properties
As is customary in the oil and gas industry, only a preliminary title review is conducted at the time properties believed to be suitable for
drilling operations are acquired by the Company. Prior to the commencement of drilling operations, a thorough title examination of the drill site
tract is conducted and curative work is performed with respect to significant defects, if any, before proceeding with operations. Anadarko
believes the title to its leasehold properties is good and defensible in accordance with standards generally acceptable in the oil and gas
industry subject to such exceptions that, in the opinion of legal counsel for the Company, are not so material as to detract substantially from
the use of such properties.
The leasehold properties owned by the Company are subject to royalty, overriding royalty and other outstanding interests customary in
the industry. The properties may be subject to burdens such as liens incident to operating agreements and current taxes, development
obligations under oil and gas leases and other encumbrances, easements and restrictions. Anadarko does not believe any of these burdens
will materially interfere with its use of these properties.
Capital Spending
See Liquidity and Capital Resources under Item 7 of this Form 10-K.
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends
2008 2007 2006

Ratio of earnings to fixed charges 4.79 4.66 5.24
Ratio of earnings to combined fixed charges and preferred stock dividends 4.79 4.64 5.21
These ratios were computed by dividing earnings by either fixed charges or combined fixed charges and preferred stock dividends. For
this purpose, earnings include income from continuing operations before income taxes and fixed charges and excludes undistributed earnings
of equity investees. Fixed charges include interest and amortization of debt expenses and the estimated interest component of rentals.
Preferred stock dividends are adjusted to reflect the amount of pretax earnings required for payment.
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Item 1A. Risk Factors

Forward-Looking Statements The Company has made in this report, and may from time to time otherwise make in other public filings, press
releases and discussions with Company management, forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 concerning the Company’s operations, economic performance and financial
condition. These forward-looking statements include information concerning future production and reserves, schedules, plans, timing of
development, contributions from oil and gas properties, marketing and midstream activities and those statements preceded by, followed by
or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,”
“objective,” “should” or similar expressions or variations on such expressions. For such statements, the Company claims the protection of
the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Although the Company
believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations
will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations
include, but are not limited to, the Company’s assumptions about energy markets, production levels, reserve levels, operating results,
competitive conditions, technology, the availability of capital resources, capital expenditures and other contractual obligations, the
supply and demand for and the price of natural gas, oil, NGLs and other products or services, volatility in the commodity futures market,
the weather, inflation, the availability of goods and services, drilling risks, future processing volumes and pipeline throughput, general
economic conditions, either internationally or nationally or in the jurisdictions in which the Company or its subsidiaries are doing
business, legislative or regulatory changes, including changes in environmental regulation, environmental risks and liability under
federal, state and foreign environmental laws and regulations, potential environmental or other obligations arising from Kerr-McGee’s
former chemical business, the securities, capital or credit markets, our ability to repay debt, the outcome of any proceedings related to the
Algerian exceptional profits tax, and other factors discussed below and elsewhere in this Form 10-K and in the Company’s other public
filings, press releases and discussions with Company management. Anadarko undertakes no obligation to publicly update or revise any
forward-looking statements.
Oil, natural gas and NGLs prices are volatile. A substantial or extended decline in prices could adversely affect our financial condition
and results of operations.
Prices for oil, natural gas and NGLs can fluctuate widely. Our revenues, operating results and future rate of growth are highly dependent
on the prices we receive for our oil, natural gas and NGLs. Historically, the markets for oil, natural gas and NGLs have been volatile and may
continue to be volatile in the future. The factors influencing the prices of oil, natural gas and NGLs are beyond our control. These factors
include, among others:
• domestic and worldwide supply of, and demand for, oil, natural gas and NGLs;
• volatile trading patterns in the commodity futures markets;
• the cost of exploring for, developing, producing, transporting, and marketing oil, natural gas and NGLs;
• weather conditions;
• the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) and other producing nations to agree to
and maintain production levels;
• the worldwide military and political environment, uncertainty or instability resulting from the escalation or additional outbreak of
armed hostilities or further acts of terrorism in the United States, or elsewhere;
• the effect of worldwide energy conservation efforts;
• the price and availability of alternative and competing fuels;
• the price and level of foreign imports of oil, natural gas and NGLs;
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• domestic and foreign governmental regulations and taxes;

• the proximity to, and capacity of, natural gas pipelines and other transportation facilities; and
• general economic conditions worldwide.
The long-term effect of these and other factors on the prices of oil, natural gas and NGLs are uncertain. Prolonged or substantial declines
in these commodity prices may have the following effects on our business:
• adversely affecting our financial condition, liquidity, ability to finance planned capital expenditures and results of operations;
• reducing the amount of oil, natural gas and NGLs that we can produce economically;
• causing us to delay or postpone some of our capital projects;
• reducing our revenues, operating income and cash flows;
• reducing the amounts of our estimated proved oil and natural gas reserves;
• reducing the carrying value of our oil and natural gas properties;
• reducing the standardized measure of discounted future net cash flows relating to oil and natural gas reserves; and
• limiting our access to sources of capital, such as equity and long-term debt.
Our debt and other financial commitments may limit our financial and operating flexibility.
As of December 31, 2008, our total debt was about $12.3 billion, which included a $1.7 billion note payable from a midstream subsidiary to
a related party. We also have various commitments for operating leases, drilling contracts and transportation and purchase obligations for
services and products. Our financial commitments could have important consequences to you. For example, they could:
• increase our vulnerability to general adverse economic and industry conditions;
• limit our ability to fund future working capital and capital expenditures, to engage in future acquisitions or development activities,
or to otherwise realize the value of our assets and opportunities fully because of the need to dedicate a substantial portion of our
cash flow from operations to payments on our debt or to comply with any restrictive terms of our debt;
• limit our flexibility in planning for, or reacting to, changes in the industry in which we operate; and
• place us at a competitive disadvantage compared to our competitors that have less debt and fewer financial commitments.
A downgrade in our credit rating could negatively impact our cost of and ability to access capital.
As of December 31, 2008, Standard and Poor’s (S&P) and Moody’s Investors Service (Moody’s) rated our debt at “BBB-” with a
positive outlook and “Baa3” with a stable outlook, respectively. Although we are not aware of any current plans of S&P or Moody’s to lower
their respective ratings on our debt, we cannot be assured that such credit ratings will not be downgraded. A downgrade in our credit ratings
could negatively impact our cost of capital or our ability to effectively execute aspects of our strategy. If we were to be downgraded, it could
be difficult for us to raise debt in the public debt markets and the cost of that new debt could be much higher than our outstanding debt issued
previously. The only outstanding debt that contains rating downgrade triggers that would accelerate the maturity dates of outstanding debt is
a $1.7 billion midstream note held by one of Anadarko’s subsidiaries, the maturity of which could accelerate if Anadarko’s senior unsecured
credit rating were to be rated below BB- by S&P or Ba3 by Moody’s. The $1.7 billion midstream note is unconditionally guaranteed by
Anadarko and, jointly and severally, by certain midstream subsidiaries.
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We may incur substantial environmental and other costs arising from Kerr-McGee’s former chemical business.
Prior to its acquisition by the Company, Kerr-McGee through an initial public offering, spun off its chemical manufacturing business to a
newly created and separate company, Tronox Incorporated (Tronox). Under the terms of a Master Separation Agreement (MSA), Kerr-McGee
agreed to reimburse Tronox for certain qualifying environmental remediation costs, subject to certain limitations and conditions and up to a
maximum aggregate reimbursement of $100 million. However, Kerr-McGee could be subject to liability for certain costs of cleaning up
hazardous substance contamination attributable to the facilities and operations conveyed to Tronox if Tronox becomes insolvent or otherwise
unable to pay for certain remediation costs. As a result of the acquisition of Kerr-McGee, we will be responsible to provide reimbursements to
Tronox pursuant to the MSA, and we may be subject to potential liability, as the successor-in-interest to Kerr-McGee, if Tronox is unable to
perform certain remediation obligations.
On January 12, 2009, Tronox and certain of its subsidiaries filed voluntary petitions to restructure under Chapter 11 of the United States
Bankruptcy Code. As a result of this filing, third parties may seek to impose liability upon Kerr-McGee that is otherwise attributable to Tronox
due to Kerr-McGee’s status as the former parent of Kerr-McGee Chemical Worldwide LLC, a predecessor-in-interest to Tronox. In addition,
based on the information contained in the Tronox bankruptcy filings, it is also possible that third parties may pursue other claims against Kerr-
McGee associated with the separation of Kerr-McGee’s former chemical business and the initial public offering of Tronox. Currently, we are
unable to estimate the amount of these potential liabilities.
Declining general economic, business or industry conditions may have a material adverse effect on our results of operations, liquidity
and financial condition.
Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the United States mortgage market
and a declining real estate market in the United States have contributed to increased economic uncertainty and diminished expectations for the
global economy.
These factors, combined with volatile oil, natural gas and NGLs prices, declining business and consumer confidence and increased
unemployment, have precipitated an economic slowdown and a recession. Concerns about global economic growth have had a significant
adverse impact on global financial markets and commodity prices. If the economic climate in the United States or abroad continues to
deteriorate, demand for petroleum products could continue to diminish, which could impact the price at which we can sell our oil, natural gas
and NGLs, affect our vendors, suppliers and customers ability to continue operations, and ultimately adversely impact our results of
operations, liquidity and financial condition.
Our results of operations could be adversely affected by asset impairments.

If oil, natural gas and NGLs prices continue to decrease, we may be required to write-down the value of our oil and gas properties if the
estimated future cash flows from these properties fall below their net book value. Future non-cash asset impairments could negatively affect
our results of operations.
As a result of mergers and acquisitions, at December 31, 2008 we had approximately $5.3 billion of goodwill on our balance sheet.
Goodwill is not amortized, but instead must be tested at least annually for impairment, and more frequently when circumstances indicate likely
impairment, by applying a fair-value-based test. Goodwill is deemed impaired to the extent that its carrying amount exceeds its implied fair
value. Various factors could lead to goodwill impairments that could have a substantial negative effect on our profitability, such as if the
Company is unable to replace the value of its depleting asset base or if other adverse events, such as lower sustained oil and gas prices,
reduce the fair value of the associated reporting unit.
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We are subject to complex laws and regulations relating to environmental protection that can adversely affect the cost, manner and
feasibility of doing business.
Our operations and properties are subject to numerous federal, state, tribal, local and foreign laws and regulations relating to
environmental protection from the time projects commence until abandonment. These laws and regulations govern, among other things:
• the amounts and types of substances and materials that may be released;
• the issuance of permits in connection with exploration, drilling and production activities;
• the protection of endangered species;
• the release of emissions;
• the discharge and disposition of generated waste materials;
• offshore oil and gas operations;
• the reclamation and abandonment of wells and facility sites; and
• the remediation of contaminated sites.
In addition, these laws and regulations may impose substantial liabilities for our failure to comply with them or for any contamination
resulting from our operations. Future environmental laws and regulations, such as proposed legislation regulating climate change, may
negatively impact our industry. The cost of meeting these requirements may have an adverse effect on our financial condition, results of
operations and cash flows. For a description of certain environmental proceedings in which we are involved, see Legal Proceedings under
Item 3 of this Form 10-K.
We are vulnerable to risks associated with operating in the Gulf of Mexico that could negatively impact our operations and financial
results.
Our operations and financial results could be significantly impacted by conditions in the Gulf of Mexico because we explore and produce
extensively in that area. As a result of this activity, we are vulnerable to the risks associated with operating in the Gulf of Mexico, including
those relating to:
• hurricanes and other adverse weather conditions;
• oil field service costs and availability;
• compliance with environmental and other laws and regulations;
• remediation and other costs resulting from oil spills or releases of hazardous materials; and
• failure of equipment or facilities.
In addition, we are currently conducting some of our exploration in the deep waters (greater than 1,000 feet) of the Gulf of Mexico, where
operations are more difficult and costly than in shallower waters. The deep waters in the Gulf of Mexico lack the physical and oilfield service
infrastructure present in its shallower waters. As a result, deepwater operations may require a significant amount of time between a discovery
and the time that we can market our production, thereby increasing the risk involved with these operations.
Further, production of reserves from reservoirs in the Gulf of Mexico generally declines more rapidly than from reservoirs in many other
producing regions of the world. This results in recovery of a relatively higher percentage of reserves from properties in the Gulf of Mexico
during the initial few years of production and, as a result, our reserve replacement needs from new prospects may be greater there than for our
operations elsewhere. Also, our revenues and return on capital will depend significantly on prices prevailing during these relatively short
production periods.
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We operate in other countries and are subject to political, economic and other uncertainties.
Our operations in areas outside the United States are based primarily in Algeria, China, Brazil, Ghana and Indonesia. As a result, we face
political and economic risks and other uncertainties with respect to our international operations. These risks may include, among other things:
• loss of revenue, property and equipment as a result of hazards such as expropriation, war, acts of terrorism, insurrection and other
political risks;
• increases in taxes and governmental royalties;
• unilateral renegotiation of contracts by governmental entities;
• difficulties enforcing our rights against a governmental agency because of the doctrine of sovereign immunity and foreign
sovereignty over international operations;
• changes in laws and policies governing operations of foreign-based companies; and
• currency restrictions and exchange rate fluctuations.
Our international operations may also be adversely affected by laws and policies of the United States affecting foreign trade and
taxation.
Realization of any of these factors could materially and adversely affect our financial position, results of operations and cash flows.
Our commodity price risk management and trading activities may prevent us from benefiting fully from price increases and may
expose us to other risks.
To the extent that we engage in price risk management activities to protect ourselves from commodity price declines, we may be
prevented from realizing the full benefits of price increases above the levels of the derivative instruments used to manage price risk. In
addition, our commodity price management and trading activities may expose us to the risk of financial loss in certain circumstances, including
instances in which:
• our production is less than the hedged volumes;
• there is a widening of price basis differentials between delivery points for our production and the delivery point assumed in the
hedge arrangement;
• the counterparties to our hedging or other price risk management contracts fail to perform under those arrangements; or
• a sudden unexpected event materially impacts oil and natural gas prices.
In addition, we engage in limited speculative trading in hydrocarbon commodities, which subjects us to additional risk.
The credit risk of financial institutions could adversely affect us.

We have exposure to different counterparties, and we have entered into transactions with counterparties in the financial services
industry, including, commercial banks, investment banks, insurance companies, other investment funds and other institutions. These
transactions expose us to credit risk in the event of default of our counterparty. Continued deterioration in the credit markets may continue to
impact the credit ratings of our current and potential counterparties and affect their ability to fulfill their existing obligations to us and their
willingness to enter into future transactions with us. We have exposure to these financial institutions in the form of derivative transactions in
connection with our hedges. We also maintain insurance policies with insurance companies to protect us against certain risks inherent in our
business. In addition, if any lender under our credit facility is unable to fund its commitment, our liquidity will be reduced by an amount up to
the aggregate amount of such lender’s commitment under our credit facility.
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Our proved reserves are estimates. Any material inaccuracies in our reserve estimates or assumptions underlying our reserve
estimates could cause the quantities and net present value of our reserves to be overstated or understated.
There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond our control that
could cause the quantities and net present value of our reserves to be overstated. The reserve information included or incorporated by
reference in this report represents estimates prepared by our internal engineers. The procedures and methods for estimating the reserves by
our internal engineers were reviewed by independent petroleum consultants. Estimation of reserves is not an exact science. Estimates of
economically recoverable oil and natural gas reserves and of future net cash flows necessarily depend upon a number of variable factors and
assumptions, any of which may cause these estimates to vary considerably from actual results, such as:
• historical production from an area compared with production from similar producing areas;
• assumed effects of regulation by governmental agencies;
• assumptions concerning future oil and natural gas prices, future operating costs and capital expenditures; and
• estimates of future severance and excise taxes, workover and remedial costs.
Estimates of reserves based on risk of recovery and estimates of expected future net cash flows prepared or audited by different
engineers, or by the same engineers at different times, may vary substantially. Actual production, revenues and expenditures with respect to
our reserves will likely vary from estimates, and the variance may be material. The net present values referred to in this report should not be
construed as the current market value of the estimated oil and natural gas reserves attributable to our properties. In accordance with SEC
requirements, the estimated discounted future net cash flows from proved reserves are generally based on prices and costs as of the date of
the estimate, while actual future prices and costs may be materially higher or lower.
Failure to replace reserves may negatively affect our business.

Our future success depends upon our ability to find, develop or acquire additional oil and natural gas reserves that are economically
recoverable. Our proved reserves generally decline when reserves are produced, unless we conduct successful exploration or development
activities or acquire properties containing proved reserves, or both. We may be unable to find, develop or acquire additional reserves on an
economic basis. Furthermore, if oil and natural gas prices increase, our costs for additional reserves could also increase.
We may not be insured against all of the operating risks to which our business is exposed.
Our business is subject to all of the operating risks normally associated with the exploration for and production, gathering, processing
and transportation of oil and gas, including hurricanes, blowouts, cratering and fire, any of which could result in damage to, or destruction of,
oil and natural gas wells or formations or production facilities and other property and injury to persons. As protection against financial loss
resulting from these operating hazards, we maintain insurance coverage, including certain physical damage, employer’s liability,
comprehensive general liability and worker’s compensation insurance. However, we are not fully insured against all risks in all aspects of our
business, such as political risk, business interruption risk and risk of major terrorist attacks. The occurrence of a significant event against
which we are not fully insured could have a material adverse effect on our financial position.
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Material differences between the estimated and actual timing of critical events may affect the completion of and commencement of
production from development projects.
We are involved in several large development projects. Key factors that may affect the timing and outcome of such projects include:
• project approvals by joint-venture partners;
• timely issuance of permits and licenses by governmental agencies;
• weather conditions;
• manufacturing and delivery schedules of critical equipment; and
• commercial arrangements for pipelines and related equipment to transport and market hydrocarbons.
Delays and differences between estimated and actual timing of critical events may affect the forward looking statements related to large
development projects.
Our domestic operations are subject to governmental risks that may impact our operations.
Our domestic operations have been, and at times in the future may be, affected by political developments and by federal, state, tribal and
local laws and regulations such as restrictions on production, changes in taxes, royalties and other amounts payable to governments or
governmental agencies, price or gathering rate controls and environmental protection regulations.
The oil and gas exploration and production industry is very competitive, and some of our exploration and production competitors have
greater financial and other resources than we do.
The oil and gas business is highly competitive in the search for and acquisition of reserves and in the gathering and marketing of oil and
gas production. Our competitors include national oil companies, major oil and gas companies, independent oil and gas companies, individual
producers, gas marketers and major pipeline companies, as well as participants in other industries supplying energy and fuel to industrial,
commercial and individual consumers. Some of our competitors may have greater and more diverse resources upon which to draw than we do.
If we are not successful in our competition for oil and gas reserves or in our marketing of production, our financial condition and results of
operations may be adversely affected.
The high cost or unavailability of drilling rigs, equipment, supplies, personnel and other oil field services could adversely affect our
ability to execute our exploration and development plans on a timely basis and within our budget.
Our industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies or qualified personnel. During these
periods, the costs of rigs, equipment, supplies and personnel are substantially greater and their availability may be limited. Additionally, these
services may not be available on commercially reasonable terms. As a result of the recent historically high levels of exploration and production
in response to strong demand for crude oil and natural gas, the demand for oilfield services has risen and the costs of these services have also
been increasing to historically high levels.
Our drilling activities may not be productive.

Drilling for oil and natural gas involves numerous risks, including the risk that we will not encounter commercially productive oil or gas
reservoirs. The costs of drilling, completing and operating wells are often uncertain, and drilling operations may be curtailed, delayed or
canceled as a result of a variety of factors, including:
• unexpected drilling conditions;
• pressure or irregularities in formations;
• equipment failures or accidents;
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• fires, explosions, blow-outs and surface cratering;

• marine risks such as capsizing, collisions and hurricanes;
• title problems;
• other adverse weather conditions; and
• shortages or delays in the delivery of equipment.
Certain of our future drilling activities may not be successful and, if unsuccessful, this failure could have an adverse effect on our future
results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling
involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons. Because of the percentage of our capital budget
devoted to higher-risk exploratory projects, it is likely that we will continue to experience significant exploration and dry hole expenses.
Repercussions from terrorist activities or armed conflict could harm our business.
Terrorist activities, anti-terrorist efforts or other armed conflict involving the United States or its interests abroad may adversely affect
the United States and global economies and could prevent us from meeting our financial and other obligations. If events of this nature occur
and persist, the attendant political instability and societal disruption could reduce overall demand for oil and natural gas, potentially putting
downward pressure on prevailing oil and natural gas prices and causing a reduction in our revenues. Oil and natural gas production facilities,
transportation systems and storage facilities could be direct targets of terrorist attacks, and our operations could be adversely impacted if
infrastructure integral to our operations is destroyed or damaged by such an attack. Costs for insurance and other security may increase as a
result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.
We have limited control over the activities on properties we do not operate.

Other companies operate some of the properties in which we have an interest. We have limited ability to influence or control the
operation or future development of these non-operated properties or the amount of capital expenditures that we are required to fund with
respect to them. Our dependence on the operator and other working interest owners for these projects and our limited ability to influence or
control the operation and future development of these properties could materially adversely affect the realization of our targeted returns on
capital and lead to unexpected future costs.
Our ability to sell our natural gas and crude oil production could be materially harmed if we fail to obtain adequate services such as
transportation.
The marketability of our production depends in part upon the availability, proximity and capacity of pipeline facilities and tanker
transportation. If any of the pipelines or tankers become unavailable, we would be required to find a suitable alternative to transport the gas
and oil, which could increase our costs and/or reduce the revenues we might obtain from the sale of the gas and oil.
Provisions in our corporate documents and Delaware law could delay or prevent a change of control of Anadarko, even if that change
would be beneficial to our stockholders.
Our restated certificate of incorporation and by-laws contain provisions that may make a change of control of Anadarko difficult, even if
it may be beneficial to our stockholders, including provisions governing the classification, nomination and removal of directors, prohibiting
stockholder action by written consent and regulating the ability of our stockholders to bring matters for action before annual stockholder
meetings, and the authorization given to our Board of Directors to issue and set the terms of preferred stock.
In addition, Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations
between us and any holder of 15% or more of our outstanding common stock.
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We may reduce or cease to pay dividends on our common stock.

We can provide no assurance that we will continue to pay dividends at the current rate or at all. The amount of cash dividends, if any, to
be paid in the future will depend upon their declaration by our Board of Directors and upon our financial condition, results of operations, cash
flow, the levels of our capital and exploration expenditures, our future business prospects and other related matters that our Board of Directors
deems relevant.
The loss of key members of our management team, or difficulty attracting and retaining experienced technical personnel, could reduce
our competitiveness and prospects for future success.
The successful implementation of our strategies and handling of other issues integral to our future success will depend, in part, on our
experienced management team. The loss of key members of our management team, including James T. Hackett, our Chairman, President and
Chief Executive Officer, could have an adverse effect on our business. We entered into an employment agreement with Mr. Hackett to secure
his employment with us. We do not carry key man insurance. Our exploratory drilling success and the success of other activities integral to
our operations will depend, in part, on our ability to attract and retain experienced explorationists, engineers and other professionals.
Competition for such professionals is intense. If we cannot retain our technical personnel or attract additional experienced technical personnel,
our ability to compete could be harmed.
Item 1B. Unresolved Staff Comments

The Company has no outstanding or unresolved SEC staff comments.
Item 3. Legal Proceedings

General The Company is a defendant in a number of lawsuits and is involved in governmental proceedings arising in the ordinary course of
business, including, but not limited to, royalty claims, contract claims and environmental claims. The Company has also been named as a
defendant in various personal injury claims, including claims by employees of third-party contractors alleging exposure to asbestos, silica and
benzene while working at refineries (previously owned by predecessors of acquired companies) located in Texas, California and Oklahoma.
While the ultimate outcome and impact on the Company cannot be predicted with certainty, management believes that the resolution of these
proceedings will not have a material adverse effect on the consolidated financial position, results of operations or cash flow of the Company.
Environmental Matters The United States Environmental Protection Agency Region 8 (EPA) and the United States Department of Justice
(DOJ) have alleged that a number of spills at the Company’s Salt Creek and Elk Basin Fields violated provisions of the federal Clean Water Act
and the facilities had inadequate Spill Prevention Control and Countermeasure (SPCC) plans and Facility Response Plans (FRP). The Company
sold substantially all of Elk Basin to a third party in 2007, but the Company agreed to retain responsibility for the historical spills, SPCC and
FRP issues at Elk Basin. The Company reached a tentative settlement with the EPA and DOJ to resolve these allegations by agreeing to pay a
fine of approximately $1 million, plus agreeing to perform certain preventative actions, subject to negotiating a mutually agreeable settlement
agreement. In the opinion of management, the liability with respect to these actions will not have a material effect on the consolidated financial
position, results of operations or cash flow of the Company.
Other Matters The Company is subject to other legal proceedings, claims and liabilities which arise in the ordinary course of its business. In
the opinion of Anadarko, the liability with respect to these actions will not have a material effect on the consolidated financial position, results
of operations or cash flow of the Company.
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Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of 2008.
Executive Officers of the Registrant
Age at End
Name of 2009 Position
James T. Hackett 55 Chairman of the Board, President and Chief Executive Officer
Karl F. Kurz 48 Chief Operating Officer
Robert P. Daniels 50 Senior Vice President, Worldwide Exploration
Robert G. Gwin 46 Senior Vice President
Charles A. Meloy 49 Senior Vice President, Worldwide Operations
Robert K. Reeves 52 Senior Vice President, General Counsel and Chief Administrative Officer
R. A. Walker 52 Senior Vice President, Finance and Chief Financial Officer
M. Cathy Douglas 53 Vice President, Chief Accounting Officer and Controller
Mr. Hackett was named President and Chief Executive Officer in December 2003 and assumed the additional role of Chairman of the
Board in January 2006. Prior to joining Anadarko, he served as President and Chief Operating Officer of Devon Energy Corporation following
its merger with Ocean Energy, Inc. in April 2003. Mr. Hackett served as President and Chief Executive Officer of Ocean Energy, Inc. from March
1999 to April 2003 and as Chairman of the Board from January 2000 to April 2003. He currently serves as a director of Fluor Corporation and
Halliburton Company and serves as Chairman of the Board of the Federal Reserve Bank of Dallas.
Mr. Kurz was named Chief Operating Officer in December 2006. Prior to this position, he served as Senior Vice President of North
American Operations, Midstream and Marketing. He was named Senior Vice President of Marketing and General Manager, U.S. Onshore in
May 2005, and from 2003 until that time he served as Vice President, Marketing. He joined Anadarko as Manager of Energy Marketing in 2000.
Mr. Kurz has also served as a director of Western Gas Holdings, LLC, a subsidiary of Anadarko and the general partner of Western Gas
Partners, LP since August 2007.
Mr. Daniels was named Senior Vice President, Worldwide Exploration in December 2006, Senior Vice President, Exploration and
Production in 2004 and named Vice President, Canada in 2001. Prior to this position, he served in various managerial roles in the Exploration
Department for Anadarko Algeria Company, LLC. He has worked for the Company since 1985.
Mr. Gwin was named Senior Vice President in March 2008. He also serves as President, Chief Executive Officer and a director of Western
Gas Holdings, LLC. He joined Anadarko in January 2006 as Vice President, Finance and Treasurer. Prior to this position, he served as
Chairman, President and CEO of Prosoft Learning Corporation from November 2002 to November 2004 and prior to that served as its Chief
Financial Officer from 2000 to November 2002. Previously, Mr. Gwin spent 10 years at Prudential Capital Group in merchant banking roles of
increasing responsibility, including serving as Managing Director with responsibility for the firm’s energy investments worldwide.
Mr. Meloy was named Senior Vice President, Worldwide Operations in December 2006 and had served as Senior Vice President, Gulf of
Mexico and International Operations since the acquisition of Kerr-McGee in August 2006. Prior to joining Anadarko, he served Kerr-McGee as
Vice President of Exploration and Production from 2005 to 2006, Vice President of Gulf of Mexico Exploration, Production and Development
from 2004 to 2005, Vice President and Managing Director of Kerr-McGee North Sea (U.K.) Limited from 2002 to 2004 and Vice President of Gulf
of Mexico Deep Water from 2000 to 2002.
Mr. Reeves was named Senior Vice President, General Counsel and Chief Administrative Officer in February 2007. He had previously
served as Senior Vice President, Corporate Affairs & Law and Chief Governance Officer since 2004. Prior to joining Anadarko, he served as
Executive Vice President, Administration and General Counsel of North Sea New Ventures from 2003 to 2004, and as Executive Vice
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President, General Counsel and Secretary of Ocean Energy, Inc. and its predecessor companies from 1997 to 2003. He has also served as a
director of Key Energy Services, Inc., a publicly traded oil field services company, since October 2007, and as a director of Western Gas
Holdings, LLC since August 2007.
Mr. Walker was named Senior Vice President, Finance and Chief Financial Officer in September 2005. Prior to joining Anadarko, he served
as Managing Director for the Global Energy Group of UBS Investment Bank from 2003 to 2005 and was President and Chief Financial Officer of
3TEC Energy Corporation from 2000 to 2003. From 1987 to 2000, he worked for Prudential Capital Group in a variety of merchant banking
positions. He has also served as a director of Temple-Inland, Inc. since November 2008, and as the Chairman of Western Gas Holdings, LLC
since August 2007. Mr. Walker also serves on the Board of Trustees of the United Way of Greater Houston and the Houston Museum of
Natural Science.
Ms. Douglas was named Vice President, Chief Accounting Officer and Controller in November 2008 and had served as Controller since
September 2007. She served as Assistant Controller from July 2006 to September 2007. Ms. Douglas also served as Director, Accounting,
Policy and Coordination from October 2006 to September 2007 and Financial Reporting and Policy Manager from January 2003 to October 2006.
She joined Anadarko in 1979.
Officers of Anadarko are elected at an organizational meeting of the Board of Directors following the annual meeting of stockholders,
which is expected to occur on May 19, 2009, and hold office until their successors are duly elected and shall have qualified. There are no family
relationships between any directors or executive officers of Anadarko.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
As of January 30, 2009, there were approximately 17,010 record holders of Anadarko common stock. The common stock of Anadarko is
traded on the New York Stock Exchange. The following shows information regarding the closing market price of and dividends declared and
paid on the Company’s common stock by quarter for 2008 and 2007.
First Second Third Fourth

Quarter Quarter Quarter Quarter
2008
Market Price
High $ 66.75 $ 79.86 $ 74.47 $ 48.21
Low $ 54.02 $ 62.56 $ 44.86 $ 27.17
Dividends $ 0.09 $ 0.09 $ 0.09 $ 0.09
2007
Market Price
High $ 43.92 $ 55.33 $ 54.77 $ 67.05
Low $ 38.63 $ 43.68 $ 47.14 $ 53.89
Dividends $ 0.09 $ 0.09 $ 0.09 $ 0.09
The amount of future common stock dividends will depend on earnings, financial condition, capital requirements and other factors, and
will be determined by the Board of Directors on a quarterly basis. For additional information, see Dividends under Item 7 and Note
11—Stockholders’ Equity and Note 12—Stock-Based Compensation under Item 8 of this Form 10-K.
Common Stock Repurchase Table The following table sets forth information with respect to repurchases by the Company of its shares of
common stock during the fourth quarter of 2008.
Total number of Approximate dollar

Total shares purchased value of shares that
number of Average as part of publicly may yet be
shares price paid announced plans purchased under the
Period purchased(1) per share or programs plans or programs(2)
October 1-31 523 $ 42.35 —
November 1-30 68,782 $ 37.79 —
December 1-31 261,306 $ 37.26 —
Fourth Quarter 2008 330,611 $ 37.38 — $ 4,400,000,000
(1)
During the fourth quarter of 2008, no shares were purchased under the Company’s share repurchase program. During the fourth quarter
of 2008, 330,611 shares purchased were related to stock received by the Company for the payment of withholding taxes due on shares
issued under employee stock plans.
(2)
In August 2008, the Company announced a share repurchase program to purchase up to $5 billion in shares of common stock. The
program replaces the prior repurchase program and is authorized to extend through August 2011; however, the repurchase program does
not obligate Anadarko to acquire any specific number of shares and may be discontinued at any time.
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Performance Graph
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC,
nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act
of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.
The following graph compares the cumulative 5-year total return to shareholders on Anadarko’s common stock relative to the cumulative
total returns of the S&P 500 index and a customized peer group of eleven companies. The companies included in the customized peer group
are: Apache Corporation, ConocoPhillips, Devon Energy Corporation, EnCana Corporation, EOG Resources, Inc., Hess Corporation, Marathon
Oil Corporation, Noble Energy, Inc., Occidental Petroleum Corporation, Pioneer Natural Resources Company and Talisman Energy Inc.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN AMONG

ANADARKO PETROLEUM CORPORATION, THE S&P 500 INDEX,
AND A PEER GROUP
LOGO
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in the Company’s common stock, in the index
and in the peer group on December 31, 2003 and its relative performance is tracked through December 31, 2008.
Fiscal Year Ended December 31 2003 2004 2005 2006 2007 2008
Anadarko Petroleum Corporation $ 100.00 $ 128.27 $ 189.10 $ 175.03 $ 266.12 $ 157.24
S&P 500 100.00 110.88 116.33 134.70 142.10 89.53
Peer Group 100.00 136.70 207.24 238.80 335.24 214.86
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Item 6. Selected Financial Data
S u m m ary Fin an cial Inform ation*

m illions, except per share am ounts 2008 2007 2006 2005 2004
Sales Revenues $14,640 $11,132 $10,116 $ 6,197 $ 5,085
Gains (Losses) on Divestitures and Other, net 1,083 4,760 114 111 755
T otal Revenues and Other 15,723 15,892 10,230 6,308 5,840
Operating Income 6,162 7,347 4,381 3,398 2,577
Income from Continuing Operations 3,198 3,770 2,474 1,975 1,325
Income from Discontinued Operations, net of taxes 63 11 2,275 356 37
Net Income Available to Common Stockholders 3,260 3,778 4,746 2,326 1,357
P er Common Share:
Income from Continuing Operations—Basic $ 6.87 $ 8.09 $ 5.37 $ 4.19 $ 2.64
Income from Continuing Operations—Diluted $ 6.84 $ 8.05 $ 5.33 $ 4.15 $ 2.62
Income from Discontinued Operations—Basic $ 0.13 $ 0.02 $ 4.94 $ 0.76 $ 0.07
Income from Discontinued Operations—Diluted $ 0.13 $ 0.02 $ 4.91 $ 0.75 $ 0.07
Net Income Available to Common Stockholders—Basic $ 7.01 $ 8.12 $ 10.31 $ 4.95 $ 2.72
Net Income Available to Common Stockholders—Diluted $ 6.97 $ 8.08 $ 10.24 $ 4.90 $ 2.69
Dividends $ 0.36 $ 0.36 $ 0.36 $ 0.36 $ 0.28
Average Number of Common Shares Outstanding—Basic 465 465 460 470 499
Average Number of Common Shares Outstanding—Diluted 468 468 464 475 503
Cash P rovided by Operating Activities—Continuing Operations $ 6,447 $ 2,766 $ 4,671 $ 3,221 $ 2,412
Cash P rovided by (Used in) Operating Activities—Discontinued Operations (5) 134 (178) 591 400
Net Cash P rovided by Operating Activities 6,442 2,900 4,493 3,812 2,812
Capital Expenditures $ 4,881 $ 3,990 $ 4,212 $ 2,644 $ 2,185
Current Debt $ 1,472 $ 1,396 $11,471 $ 80 $ 169
Long-term Debt 9,128 11,151 11,520 3,547 3,621
Midstream subsidiary note payable to a related party 1,739 2,200 — — —
T otal Debt $12,339 $14,747 $22,991 $ 3,627 $ 3,790
Stockholders’ Equity 18,795 16,364 12,403 8,649 7,027
T otal Assets $48,923 $48,451 $54,964 $18,902 $16,714
Annual Sales Volumes:
Continuing Operations
Gas (Bcf) 750 698 558 414 499
Oil and Condensate (MMBbls) 67 79 70 57 63
Natural Gas Liquids (MMBbls) 14 16 15 13 16
T otal (MMBOE)** 206 211 178 139 162
Discontinued Operations (MMBOE) — — 17 20 29
T otal (MMBOE)** 206 211 195 159 191
Average Daily Sales Volumes:
Gas(MMcf/d) 2,049 1,912 1,529 1,136 1,363
Oil and Condensate (MBbls/d) 182 215 193 155 172
Natural Gas Liquids (MBbls/d) 39 43 42 36 43
T otal (MBOE/d) 563 577 489 380 442
Discontinued Operations (MBOE/d) — — 46 55 79
T otal (MBOE/d) 563 577 535 435 521
Reserves:
Oil Reserves (MMBbls) 926 1,014 1,264 1,090 1,073
Gas Reserves (T cf) 8.1 8.5 10.5 6.6 6.2
T otal Reserves (MMBOE) 2,277 2,431 3,011 2,187 2,113
Discontinued Operations (MMBOE) — — — 262 254
T otal Reserves (MMBOE) 2,277 2,431 3,011 2,449 2,367
Number of Employees 4,300 4,000 5,200 3,300 3,300
* Consolidated for Anadarko Petroleum Corporation and its subsidiaries. Certain amounts for prior years have been reclassified to conform to the current
presentation. Factors that materially effect the comparability of this information are disclosed in Managem ent’s Discussion and Analysis of Financial
Condition and Results of Operations under Item 7 of this Form 10-K.
** Natural gas converted to equivalent barrels at the rate of 6,000 cubic feet of gas per barrel.
T able of Measures
Bcf—Billion cubic feet MMBbls—Million barrels
BOE—Barrels of oil equivalent MMBOE—Million barrels of oil equivalent
MBbls/d—T housand barrels per day MMcf/d—Million cubic feet per day
MBOE/d—T housand BOE per day T cf—T rillion cubic feet
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read together with the Consolidated Financial Statements and the Notes to Consolidated
Financial Statements, which are included in this report in Item 8, and the Risk Factors information, which are set forth in Item 1A.
Overview
Anadarko Petroleum Corporation is among the world’s largest independent oil and natural gas exploration and production companies.
Anadarko’s primary line of business is the exploration, development, production, gathering, processing and marketing of natural gas, crude oil,
condensate and NGLs. The Company’s major areas of operations are located in the United States and Algeria, with additional activity in Brazil,
China, Ghana, Indonesia, Mozambique and several other countries.
Anadarko achieved its key operational objectives in 2008, during a year marked by a downturn in the financial markets and a volatile
commodity-price environment that included New York Mercantile Exchange (NYMEX) oil prices rising to highs above $140 per barrel, and
falling to lows under $40 per barrel. The Company is managing its 2009 capital program consistent with a sustained lower-commodity-price
environment. Anadarko ended 2008 with approximately $2.4 billion of cash on hand and retains the availability of its undrawn $1.3 billion
revolving credit agreement (RCA), along with access to credit markets. Management expects this liquidity position and cash flow from
operations to position the Company to meet its 2009 operational objectives and capital commitments.
Mission and Strategy

Anadarko’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil
and natural gas resources vital to the world’s health and welfare. Anadarko employs the following strategy to achieve this mission:
• Identify and commercialize resources
• Explore in high-potential, proven basins
• Employ global business development approach
• Ensure financial discipline and flexibility
The first portion of this strategy involves Anadarko developing its portfolio of primarily unconventional resources that give the
Company a stable base of capital-efficient, predictable and repeatable development opportunities to consistently grow the Company at
competitive rates.
Exploring in high-potential, proven and emerging basins worldwide provides the Company with differential growth. Anadarko’s
exploration success creates value by expanding its future resource potential, while providing the flexibility to manage risk by monetizing
discoveries.
Anadarko’s global business development approach transfers core skills across the globe to discover and develop world-class resources
that are accretive to the Company’s performance. These resources help form an optimized-global portfolio where both surface and subsurface
risks are actively managed.
A strong balance sheet is essential for the development of the Company’s assets, and Anadarko is committed to disciplined investments
in its businesses to manage through commodity price cycles. Maintaining financial discipline enables the Company to capitalize on the
flexibility of its global portfolio, while allowing the Company to pursue new strategic and tactical-growth opportunities.
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Operating Highlights
The Company overcame significant weather events and third-party-related infrastructure issues in 2008 to achieve production growth,
reserve additions, and production replacement. Significant operational highlights by area include:
United States Onshore
• Achieved record production in the Rocky Mountain region
• Secured additional takeaway and processing capacity in the Rockies region
• Expanded acreage position and began testing prospects in the Haynesville and Marcellus shale plays, located in East Texas and
central Pennsylvania, respectively, as well as the Maverick basin in South Texas
Gulf of Mexico
• Announced a successful appraisal well at Tonga West and approved the Caesar/Tonga complex
• All Anadarko-operated facilities successfully weathered two major hurricanes with only minor, localized surface damage; however
some production remained curtailed due to third-party pipeline and infrastructure issues
• Restored production to pre-shut-in levels at Independence Hub within 72 hours of Hurricane Ike
• Restored production on June 16, 2008 to nearly a billion cubic feet per day of natural gas at Independence Hub after a ten-week
shut-in due to a third-party export pipeline leak
International
• Announced major discoveries and successful appraisal wells offshore Ghana in and near the Jubilee field
• Announced the Company’s first pre-salt discovery in the Campos basin offshore Brazil at the Wahoo prospect
• Achieved 1-billion-barrel production milestone in Algeria
• Acquired six blocks in the West Africa Cretaceous trend located in Sierra Leone and Liberia
Financial Highlights
The Company’s 2008 financial highlights include:
• Generated $6.4 billion of cash flow from continuing operating activities compared to $2.8 billion in 2007 due to higher commodity
prices
• Announced a $5 billion share repurchase program and completed $600 million of repurchases in the third quarter of 2008
• Completed an initial public offering through the issuance of 20.8 million common units of its formerly wholly-owned midstream
subsidiary, WES, for net proceeds of $321 million
• Closed the divestitures of the Company’s interest in the Peregrino field offshore Brazil and the Kaskida discovery in the deepwater
Gulf of Mexico for before-tax proceeds of approximately $1.8 billion
• Reduced year-end debt-to-capital ratio to 39.6%. Reduced debt by $2.4 billion in 2008, including repayment of the Company’s 2006
acquisition financing and approximately $580 million of floating rate notes due in 2009
• Closed 2008 with $2.4 billion of cash on hand
• Operated in a volatile commodity-price environment that included NYMEX oil prices rising to highs above $140 per barrel, and
falling to lows under $40 per barrel
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The following discussion pertains to Anadarko’s financial condition, results of operations and changes in financial condition. Unless
noted otherwise, the following information relates to continuing operations and excludes the discontinued Canadian operations. The primary
factors that affect the Company’s results of operations include, among other things, commodity prices for natural gas, crude oil and NGLs,
production volumes, the Company’s ability to find additional oil and natural gas reserves, as well as the cost of finding reserves and changes
in the levels of costs and expenses required for continuing operations. Unless the context otherwise requires, the terms “Anadarko” or
“Company” refer to Anadarko Petroleum Corporation and its consolidated subsidiaries. Following is an index by major category of discussion
including a brief description of contents:
Table of Contents
Page
Financial Results — comparative discussion of financial results of operations 35
Operating Results — discussion of business activities 43
Liquidity and Capital Resources — discussion of sources and uses of cash, outlook on operations and
material financial arrangements, obligations and commitments 50
Critical Accounting Estimates — discussion of significant judgments and estimates 60
Recent Accounting Developments — discussion of accounting guidance effective in future periods 65
Results of Continuing Operations

Selected Data
millions except per share amounts and percentages 2008 2007 2006(2)
Financial Results
Sales revenues $14,640 $11,132 $10,116
Gains on divestitures and other, net 1,083 4,760 114
Total revenues and other 15,723 15,892 10,230
Costs and expenses 9,561 8,545 5,849
Other (income) expense 816 1,018 644
Income tax expense 2,148 2,559 1,263
Income from continuing operations $ 3,198 $ 3,770 $ 2,474
Earnings per common share—diluted $ 6.84 $ 8.05 $ 5.33
Average number of common shares outstanding—diluted 468 468 464
Operating Results
Adjusted EBITDAX(1) $10,874 $11,217 $ 7,203
Total proved reserves (MMBOE) 2,277 2,431 3,011
Annual sales volumes (MMBOE) 206 211 178
Capital Resources and Liquidity
Cash provided by operating activities $ 6,447 $ 2,766 $ 4,671
Capital expenditures 4,881 3,990 4,212
Total debt 12,339 14,747 22,991
Stockholders’ equity $18,795 $16,364 $12,403
Debt to total capitalization ratio 39.6% 47.4% 65.0%
(1)
See Segment Analysis—Adjusted EBITDAX for a description of Adjusted EBITDAX, which is not a Generally Accepted Accounting
Principles (GAAP) measure, and a reconciliation of Adjusted EBITDAX to income from continuing operations before income taxes, which is
presented in accordance with GAAP.
(2)
Anadarko’s financial and operating results for 2006 include the operating results of Kerr-McGee and Western since the dates of their
acquisitions on August 10, 2006, and August 23, 2006, respectively.
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Financial Results
Income from Continuing Operations Anadarko’s income from continuing operations for 2008 totaled $3.2 billion, or $6.84 per share (diluted),
compared to income from continuing operations for 2007 of $3.8 billion, or $8.05 per share (diluted). Anadarko had income from continuing
operations in 2006 of $2.5 billion, or $5.33 per share (diluted). The decrease in income from continuing operations for 2008 compared to 2007
was primarily due to a decrease in gains on divestitures and higher costs and expenses, partially offset by higher natural gas, oil and NGLs
sales, including the impact of derivatives, lower interest expense and lower income tax expense. The increase in 2007 income from continuing
operations compared to 2006 was primarily due to gains on divestitures and higher sales volumes, partially offset by the impact of lower
natural gas and oil and condensate prices, higher costs and expenses, including other taxes related to an Algerian exceptional profits tax, and
higher interest expense. In 2008, the higher sales revenues and costs and expenses were due primarily to the impact of higher commodity
prices, higher exploration expense related to impairments of unproved properties and higher other taxes related to the higher commodity prices.
In 2007, the higher sales volumes and costs and expenses were due primarily to the impact of operations acquired with the third quarter 2006
acquisitions.
Sales Revenues
∆ ∆
vs. vs.
millions except percentages 2008 2007 2008 2006 2007
Gas sales $ 6,254 $ 4,119 52% $ 4,186 (2)%
Oil and condensate sales 6,502 4,807 35 4,618 4
Natural gas liquids sales 802 719 12 594 21
Gathering, processing and marketing sales 1,082 1,487 (27) 718 107
Total $14,640 $11,132 32 $10,116 10
Anadarko’s sales revenues for 2008 increased when compared to 2007 due to higher oil and condensate, natural gas and NGLs
commodity prices and unrealized gains on derivatives, partially offset by lower sales volumes associated with properties that were divested in
2007. The increase in 2007 compared to 2006 was primarily due to higher sales volumes, partially offset by significantly lower natural gas and
oil and condensate prices.
The Company’s sales revenues for 2008, 2007 and 2006 include $930 million, $(1,100) million and $895 million, respectively, related to net
unrealized gains (losses) on derivatives used to manage price risk on natural gas, crude oil, condensate and NGLs sales. The significant
fluctuations in unrealized gains (losses) are due primarily to an increase in Anadarko’s derivative portfolio as a result of the 2006 acquisition of
Kerr-McGee, as well as the discontinuance of hedge accounting effective January 1, 2007. The majority of the unrealized gains recorded in
2006 related to derivatives assumed with the Kerr-McGee acquisition. Any realization of these gains or losses is expected to be substantially
offset by the value realized from that portion of the Company’s production covered by the derivative instruments.
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Analysis of Oil and Gas Operations Sales Revenues
The following table provides a summary of the effects of changes in volumes, prices and derivatives gains and losses on Anadarko’s
sales revenues for the year ended December 31, 2008 compared to 2007 and 2006.
Natural Oil and

millions Gas Condensate NGLs
2006 sales revenues $ 4,186 $ 4,618 $ 594
Changes associated with sales volumes 858 481 26
Changes in prices, excluding derivatives (282) 659 108
Changes in realized derivative gains and losses 331 (40) (9)
Changes in unrealized derivative gains and losses (974) (911) —
2007 sales revenues $ 4,119 $ 4,807 $ 719
Changes associated with sales volumes 300 (802) (63)
Changes in prices, excluding derivatives 1,436 1,838 146
Changes in realized derivative gains and losses (368) (514) —
Changes in unrealized derivative gains and losses 767 1,173 —
2008 sales revenues $ 6,254 $ 6,502 $ 802
The Company utilizes derivative instruments to manage the risk of a decrease in the market prices for its anticipated sales of natural gas,
crude oil, condensate and NGLs. This activity is referred to as price risk management. The impact of price risk management (including realized
and unrealized gains and losses) increased revenues $586 million in 2008, decreased revenues $472 million in 2007 and increased revenues
$1,131 million in 2006. See Energy Price Risk under Part II, Item 7A and Note 8—Derivative Instruments under Part II, Item 8 of this Form 10-K.
Analysis of Oil and Gas Operations Sales Volumes
∆ ∆
vs. vs.
2008 2007 2008 2006 2007
Barrels of Oil Equivalent (MMBOE except percentages)
United States 179 180 (1)% 147 22%
Algeria 21 24 (13) 23 4
Other International 6 7 (14) 8 (13)
Total 206 211 (2) 178 19
Barrels of Oil Equivalent per Day (MBOE/d except percentages)
United States 489 492 (1) 404 22
Algeria 58 65 (11) 64 2
Other International 16 20 (20) 21 (5)
Total 563 577 (2) 489 18
Anadarko’s daily sales volumes increased in 2008 compared to 2007, excluding 2007 divested property volumes of 45 MBOE/d, primarily
due to an increase in the United States of 38 MBOE/d related to higher sales volumes in the Rockies due to improved drilling efficiencies
allowing for more overall drilling and the Gulf of Mexico. The sales volume increase in the Gulf of Mexico was realized despite prolonged
repairs of third-party downstream infrastructure at the end of 2008 as a result of the 2008 hurricane activity. Volumes in Algeria decreased 7
MBOE/d primarily as a result of lower production due to maintenance, a statutory shutdown and current production constraints implemented
by OPEC in the fourth quarter of 2008. During 2007, Anadarko’s daily sales volumes increased compared to 2006 primarily due to higher sales
volumes of 138 MBOE/d
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associated with the full-period impact of the 2006 acquisitions and higher sales volumes in the Gulf of Mexico of 18 MBOE/d associated with
production start up at Independence Hub in the second half of 2007, partially offset by a decrease in sales volumes of 64 MBOE/d associated
with the impact of 2007 divestitures in the onshore United States, the Gulf of Mexico and Qatar.
Sales volumes represent actual production volumes adjusted for changes in commodity inventories. Anadarko employs marketing
strategies to help manage volumes and mitigate the effect of price volatility, which is likely to continue in the future.
Natural Gas Sales Volumes, Average Prices and Revenues
∆ vs. ∆ vs.
2008 2007 2008 2006 2007
(Percentages) (Percentages)
United States
Sales volumes—Bcf 750 698 7% 558 25%
MMcf/d 2,049 1,912 7 1,529 25
Price per Mcf, excluding derivatives $ 7.65 $ 5.74 33 $ 6.14 (7)
Realized gains (losses) on derivatives 0.19 0.73 (74) 0.33 121
7.84 6.47 21 6.47 —
Unrealized gains (losses) on derivatives 0.50 (0.57) 188 1.03 (155)
Total $ 8.34 $ 5.90 41 $ 7.50 (21)
Gas sales revenues (millions) $6,254 $4,119 52 $4,186 (2)
The Company’s daily natural gas sales volumes increased in 2008 compared to 2007, excluding 2007 divested property volumes of 156
MMcf/d, primarily due to higher sales volumes in the Gulf of Mexico of 175 MMcf/d as a result of the start up of the Independence Hub and
increased production in the Rockies of 162 MMcf/d due to improved drilling efficiencies allowing for more overall drilling, partially offset by
decreased production in the Southern Region of 44 MMcf/d. Anadarko’s daily natural gas sales volumes in 2007 increased when compared to
2006. The increases were primarily due to higher sales volumes associated with the 2006 acquisitions of 491 MMcf/d and higher sales volumes
of 106 MMcf/d in the Gulf of Mexico related to the start up of the Independence Hub, partially offset by decreases in sales volumes of 224
MMcf/d associated with 2007 divestitures in the onshore United States and Gulf of Mexico. Production of natural gas is generally not directly
affected by seasonal swings in demand.
Excluding the impact of gains and losses on derivatives, Anadarko’s average natural gas price for 2008 increased when compared to
2007. The relative difference in 2008 and 2007 prices is primarily attributable to strong prices in the first half of 2008. The strong price in 2008
stemmed from lower year-over-year natural gas storage volumes coupled with lower liquefied natural gas volumes available to the United
States consumer, both of which were caused principally by increased demand and pricing in both Europe and Asia. Excluding the impact of
both realized and unrealized gains and losses on derivatives, Anadarko’s average natural gas price for 2007 decreased when compared to 2006.
The lower natural gas price is attributable to a higher than average North America natural gas storage level in 2007, the full year effect in 2007
of the return of Gulf of Mexico gas production capacity in 2006 that was damaged during the 2005 hurricane season and a significant increase
in liquefied natural gas supply into the United States. As of December 31, 2008, the Company has implemented price risk management on about
24% of its anticipated natural gas wellhead sales volumes for 2009.
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Crude Oil and Condensate Sales Volumes, Average Prices and Revenues
∆ vs. ∆ vs.
2008 2007 2008 2006 2007
United States
Sales volumes—MMBbls 40 48 (17)% 39 23%
MBbls/d 108 130 (17) 108 20
Price per barrel, excluding derivatives $ 96.20 $ 66.64 44 $59.41 12
Realized gains (losses) on derivatives (8.15) 1.35 (704) 2.64 (49)
88.05 67.99 30 62.05 10
Total $ 96.23 $ 57.24 68 $68.59 (17)
Algeria
Sales volumes—MMBbls 21 24 (13) 23 4
MBbls/d 58 65 (11) 64 2
Price per barrel, excluding derivatives $ 98.99 $ 75.50 31 $65.55 15
Realized gains (losses) on derivatives (5.86) — NM — NM
93.13 75.50 23 65.55 15
Unrealized gains (losses) on derivatives 9.14 (5.91) 255 — NM
Total $102.27 $ 69.59 47 $65.55 6
Other International
Sales volumes—MMBbls 6 7 (14) 8 (13)
MBbls/d 16 20 (20) 21 (5)
Total average price per barrel $ 85.51 $ 59.91 43 $48.58 23
Total
Sales volumes—MMBbls 67 79 (15) 70 13
MBbls/d 182 215 (15) 193 11
Total price per barrel, excluding derivatives $ 96.15 $ 68.68 40 $60.28 14
Realized gains (losses) on derivatives (6.72) 0.82 (920) 1.48 (45)
89.43 69.50 29 61.76 13
Total $ 97.21 $ 61.19 59 $65.43 (7)
Total oil and condensate sales revenues (millions) $ 6,502 $ 4,807 35 $4,618 4
NM—not meaningful
Anadarko’s daily crude oil and condensate sales volumes were lower in 2008 compared to 2007, excluding 2007 divested property
volumes of 15 MBbls/d, primarily due to lower crude oil sales volumes of 13 MBbls/d in the Gulf of Mexico due to 2008 hurricane activity,
lower crude oil sales volumes of 7 MBbls/d in Algeria, primarily as a result of lower production due to maintenance, a statutory shutdown and
current production constraints implemented by OPEC in the fourth quarter of 2008, and lower crude oil sales volumes of 3 MBbls/d in Alaska,
partially offset by higher crude oil sales volumes of 5 MBbls/d in the Rockies. Anadarko’s daily crude oil and condensate sales volumes for
2007 were up when compared to the same period of 2006. The increases in 2007 compared to 2006 were primarily due to an increase in sales
volumes of 48 MBbls/d associated with the 2006 acquisitions, partially offset by a decrease in sales volumes of 20 MBbls/d associated with
2007 divestitures in the onshore United States, the Gulf of Mexico and Qatar and a decrease in Venezuelan sales volumes due to contract
changes in late 2006. Production of oil usually is not affected by seasonal swings in demand.
Excluding the impact of gains and losses on derivatives, Anadarko’s average crude oil price for 2008 increased when compared to 2007.
Crude oil prices were strong in the first half of 2008, primarily due to limited excess production capacity, heightened geopolitical tension and
increased demand in Asia; particularly China and
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India. Excluding the impact of both realized and unrealized gains and losses on derivatives, Anadarko’s average crude oil price for 2007
increased when compared to 2006. The higher crude oil prices were attributed primarily to additional global demand, limited excess production
capacity and heightened geopolitical tension. As of December 31, 2008, the Company has utilized price risk management on about 28% of its
anticipated oil and condensate sales volumes for 2009.
Natural Gas Liquids Sales Volumes, Average Prices and Revenues
∆ vs. ∆ vs.
2008 2007 2008 2006 2007
United States
Sales volumes—MMBbls 14 16 (13)% 15 7%
MBbls/d 39 43 (9) 42 2
Price per barrel, excluding derivatives $56.11 $45.87 22 $39.71 16
Realized gains (losses) on derivatives — 0.03 NM (0.13) NM
56.11 45.90 22 39.58 16
Unrealized gains (losses) on derivatives — — NM — NM
Total $56.11 $45.90 22 $39.58 16
Natural gas liquids sales revenues (millions) $ 802 $ 719 12 $ 594 21
NGLs sales represent revenues derived from the processing of Anadarko’s natural gas production. The Company’s daily NGLs sales
volumes were down in 2008 compared to 2007 primarily due to a 4 MBbls/d decrease associated with the 2007 divestitures. Anadarko’s daily
NGLs sales volumes were up in 2007 compared to 2006 primarily due to higher sales volumes of 8 MBbls/d associated with the 2006
acquisitions, partially offset by a decrease in sales volumes of 6 MBbls/d related to the 2007 divestitures.
Excluding the impact of gains and losses on derivatives, the average NGLs price increased in 2008 compared to 2007 primarily due to
increased global petrochemical demand for the first three quarters of 2008. During 2007, average NGLs prices increased when compared to 2006
primarily due to increased petrochemical demand in 2007. NGLs production is dependent on natural gas and NGLs prices as well as the
economics of processing the natural gas to extract NGLs. Production of NGLs usually is not affected by seasonal swings in demand.
Gathering, Processing and Marketing Revenues
∆ ∆
vs. vs.
Gathering and processing sales $1,085 $1,259 (14)% $538 134%
Marketing sales (3) 228 (101) 180 27
Total $1,082 $1,487 (27) $718 107
Gathering and processing revenues represent revenues derived from gathering and processing natural gas from sources other than the
Company’s production. Marketing sales primarily represent the margin earned on sales of gas, oil and NGLs purchased from third parties.
During 2008, gathering and processing sales decreased $174 million compared to 2007 primarily due to lower volumes as a result of the 2007
divestitures, partially offset by higher product prices and gathering rates. Marketing sales decreased $231 million during 2008 primarily due to
lower margins on firm transportation contracts, write-down of storage inventory due to lower commodity prices in the fourth quarter of 2008
and less third-party marketing activity. During 2007, gathering and processing sales increased $721 million compared to 2006 due to gathering
and processing operations acquired with the 2006 acquisitions, partially offset by a decrease associated with divestitures in 2007.
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Gains (Losses) on Divestitures and Other, net
Gains on divestitures in 2008 were $1.2 billion, primarily related to the divestiture of certain oil and gas properties in Brazil, onshore in the
United States and the Gulf of Mexico, in several unrelated transactions. Gains on divestitures in 2007 related primarily to the Company’s asset
realignment program. During 2007, net gains of $4.1 billion related to divestitures of oil and gas properties and net gains of $0.6 billion related
to the divestiture of certain gathering and processing interests that were not affiliated with the Company’s operating areas. Gains on
divestitures in 2006 were $26 million. For additional information, see Acquisitions and Divestitures below.
In 2008, gains (losses) on divestitures and other, net includes a net $82 million ($52 million after tax) reduction related to corrections
resulting from analysis of property records after the adoption of the successful efforts method of accounting. This net amount includes a
reduction of $163 million related to 2007. Management concluded that this misstatement was not material relative to 2007 interim and annual
results, or to the 2008 periods, and corrected the error in the first quarter of 2008.
Costs and Expenses
∆ ∆
vs. vs.
Oil and gas operating $1,104 $1,101 — % $ 822 34%
Oil and gas transportation and other 553 453 22 341 33
Exploration 1,369 905 51 737 23
Gathering, processing and marketing 800 1,025 (22) 553 85
General and administrative 866 936 (7) 768 22
Depreciation, depletion and amortization 3,194 2,840 12 1,752 62
Other taxes 1,452 1,234 18 549 125
Impairments 223 51 337 327 (84)
Total $9,561 $8,545 12 $5,849 46
During 2008, Anadarko’s costs and expenses increased when compared to 2007 due to the following factors:
— Oil and gas operating expenses were impacted by a decrease of $111 million associated with the 2007 divestitures, a decrease in
demand charges of $46 million in the Gulf of Mexico and lower insurance expenses of $20 million related to Gulf of Mexico
properties, offset primarily by higher operating costs of $79 million in the Rockies, higher direct operating and third-party expense
of $63 million in the Gulf of Mexico and gas processing fees of $31 million in the Gulf of Mexico, primarily associated with the
startup of Independence Hub in July 2007.
— Oil and gas transportation and other expenses increased primarily due to higher transportation charges in the Rockies and Southern
Region, higher surface owner payments in the Rockies and due to expenses associated with the Independence Hub startup in July
2007.
— Exploration expense increased $464 million primarily due to a $337 million impairment of unproved properties in the Gulf of Mexico, a
$55 million impairment of unproved properties in Trinidad, a $40 million impairment of unproved properties in Brazil, and a $34
million increase in geological and geophysical costs, primarily in Mozambique.
— Gathering, processing and marketing (GPM) expenses decreased $225 million. Costs associated with gathering and processing
operations decreased $183 million primarily due to 2007 divestitures and a reduction of accrued expenses related to a prior period of
$29 million, partially offset by an increase in cost of product due to higher prices and direct operating costs. Marketing
transportation costs decreased $39 million.
— General and administrative (G&A) expense decreased primarily due to a $42 million decrease in employee severance and termination
benefits, lower compensation expense of $39 million and a decrease of $16 million in contract labor expense, partially offset by
higher benefit plans expense of $33 million.
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— Depreciation, depletion and amortization (DD&A) expense increased in 2008. DD&A expense associated with oil and gas properties
increased approximately $416 million due to higher costs associated with acquiring, finding and developing oil and gas reserves.
This increase was partially offset by a decrease of approximately $43 million due to lower sales volumes and a decrease in
depreciation of other properties and equipment of $28 million primarily due to divestitures.
— Other taxes increased primarily due to increased production and severance taxes of $194 million related primarily to higher
commodity prices, increases associated with the effects of a windfall profits tax in China of $55 million and increased ad valorem
taxes of $43 million. This increase was partially offset by a decrease in the Algerian exceptional profits tax expense primarily
attributable to a change in the estimate of the 2006 exceptional profits tax recognized in the first quarter of 2007.
— Impairments of $113 million, $98 million and $12 million in 2008 were related to Oil and Gas Exploration and Production segment
properties in the United States, Midstream segment assets and Marketing segment assets, respectively. The Oil and Gas
Exploration and Production segment and Midstream segment impairments were primarily a result of lower commodity prices at year-
end 2008. The Marketing segment impairments related to the impairment of transportation contracts.
During 2007, Anadarko’s costs and expenses increased when compared to 2006 due to the following factors:
— Oil and gas operating expense increased primarily due to approximately $227 million in operating expenses on properties acquired
with the 2006 acquisitions, an increase of $71 million in expenses in the deepwater Gulf of Mexico related primarily to subsurface
repairs and operating costs of Independence Hub which began production in 2007, a $28 million increase in costs associated
primarily with the ramp up of activity in the Rockies and an increase of approximately $20 million related to severance cost
associated with the Company’s post-acquisition asset realignment program. These increases were partially offset by decreases of
approximately $66 million associated with properties divested during 2007.
— Oil and gas transportation and other expenses increased in 2007. Transportation expenses increased primarily due to higher
volumes transported as a result of the 2006 acquisitions, partially offset by a decrease associated with properties divested in 2007.
— Exploration expense increased $168 million due primarily to a $140 million increase in impairments of unproved properties, primarily
associated with a significant increase in unproved leasehold interests as a result of the 2006 acquisitions, and a $28 million increase
in dry hole expense related to international activities.
— GPM expenses increased $472 million. Costs associated with gathering and processing operations increased $389 million primarily
due to facilities acquired in 2006. Marketing transportation and cost of product increased $83 million primarily due to higher
volumes transported as a result of the 2006 acquisitions and the assumption of firm transportation contracts in 2006.
— G&A expense increased primarily due to increases in compensation and benefit expenses of $158 million associated primarily to
rising base compensation and benefit costs for employees, higher performance-based bonus expense and an increase in the
average number of employees associated with the 2006 acquisitions.
— DD&A expense increased in 2007. DD&A expense associated with oil and gas properties increased approximately $719 million as a
result of operations acquired in 2006, approximately $367 million due to higher costs associated with acquiring, finding and
developing oil and gas reserves and approximately $43 million due to higher organic sales volumes primarily associated with first
production at Independence Hub in the Gulf of Mexico. Depreciation of other properties and equipment increased approximately
$105 million primarily due to gathering, processing and general properties obtained with the 2006 acquisitions. These increases were
partially offset by a decrease of approximately $149 million related to oil and gas properties divested in 2007.
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— Other taxes increased in 2007. Other taxes include an increase of $602 million associated with the Algerian exceptional profits tax.
The remaining increase of $83 million is primarily due to the effect of higher sales volumes on production taxes, the effect of a new
Alaskan severance tax, the effect of a windfall profits tax in China and higher franchise taxes.
— Impairments of $35 million and $16 million in 2007 were related to the Oil and Gas Exploration and Production segment and the
Marketing segment in the United States, respectively. Impairments in 2006 include a $166 million loss associated with the
termination of the Venezuela operating service agreement in exchange for an 18% equity interest in a new operating company
related to the Oil and Gas Exploration and Production segment and a $139 million impairment related to the decision to suspend
construction of the Company’s Bear Head LNG project in Nova Scotia for the Marketing segment.
Other (Income) Expense
∆ ∆
vs. vs.
Interest Expense
Gross interest expense—
Current debt, long-term debt and other $ 756 $1,212 (38)% $730 66%
Midstream subsidiary note payable to a related party 109 2 5,350 — NM
Capitalized interest (123) (122) 1 (80) 53
Net interest expense 742 1,092 (32) 650 68
Other (Income) Expense, net
Interest income (44) (84) (48) (47) 79
Other 95 10 850 41 (76)
Total other (income) expense, net 51 (74) (169) (6) 1,133
Minority Interests 23 — NM — NM
Total $ 816 $1,018 (20) $644 58
Interest Expense Anadarko’s gross interest expense for 2008 decreased compared to 2007. The decrease was primarily due to lower average
debt levels in 2008 and decreases in average floating interest rates in 2008. Anadarko’s gross interest expense increased during 2007 compared
to 2006. The increase was primarily due to higher average borrowings associated with the 2006 acquisitions and higher interest rates compared
to 2006. For additional information see Acquisitions and Divestitures and Debt below and Interest Rate Risk under Item 7A of this Form 10-K.
The amount of capitalized interest in 2008 is comparable to capitalized interest in 2007. In 2007, capitalized interest increased compared to
2006. This increase was primarily due to increased costs for major projects.
Other (Income) Expense For 2008, the Company had total other expense of $51 million compared to total other income of $74 million for 2007.
The decrease of $125 million was primarily related to lower interest income of $40 million due to lower average cash levels and lower interest
rates in 2008, a $40 million loss related to environmental reserve adjustments and $54 million of impairment losses related to equity
investments.
For 2007, the Company had total other income of $74 million compared to $6 million for 2006. The increase of $68 million was primarily due
to higher interest income of $37 million, a $22 million loss on an impaired equity investment in 2006 and a $10 million loss related to
environmental reserve adjustments in 2006.
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Minority Interests For 2008, the Company had minority interests expense of $23 million primarily related to the public ownership of a 36.7%
limited partnership interest in WES which completed its initial public offering in the second quarter of 2008. See Master Limited Partnership
Initial Public Offering below.
Income Tax Expense
millions except percentages 2008 2007 2006

Income tax expense $2,148 $2,559 $1,263
Effective tax rate 40% 40% 34%
For 2008, income tax expense related to continuing operations decreased 16% compared to 2007 primarily due to a decrease in income
before income taxes. For 2007, income tax expense related to continuing operations increased 103% compared to 2006 primarily due to an
increase in income before income taxes and variances from the statutory rate.
The variance from the 35% statutory rate in 2008 is primarily attributable to the accrual of the Algerian exceptional profits tax, which is
non-deductible for Algerian income tax purposes, U.S. tax on foreign inclusions and distributions, state income taxes and other items. This
increase in the 35% statutory rate is offset by a foreign tax rate applicable to the Company's divestiture of its 50% interest in the Peregrino field
offshore Brazil, which is a rate lower than the 35% U.S. statutory rate, and other items. The variance from the 35% statutory rate in 2007 was
primarily caused by the Algerian exceptional profits tax, which is non-deductible for Algerian income tax purposes, other foreign taxes in
excess of federal statutory rates, state income taxes and other items. For 2006, the variance from the 35% statutory rate was primarily caused by
foreign taxes in excess of federal statutory rates, state income taxes, excess U.S. foreign tax credits and other items.
Texas House Bill 3, signed into law in May 2006, eliminates the taxable capital and earned surplus components of the existing franchise
tax and replaces these components with a taxable margin tax calculated on a combined basis. The new tax is effective for reports due on or after
January 1, 2008 (based on business activity during 2007). Anadarko is required to include the impact of the law change on its deferred state
income taxes in income for the period which includes the date of enactment. The adjustment, a reduction in Anadarko’s deferred state income
taxes in the amount of approximately $14 million and $69 million, net of federal benefit, was included in the 2007 and 2006 tax provision,
respectively.
Operating Results
Segment Analysis—Adjusted EBITDAX To assess the operating results of Anadarko’s segments, management uses income from continuing
operations before income taxes, interest expense, exploration expense, DD&A expense and impairments (Adjusted EBITDAX). Anadarko’s
definition of Adjusted EBITDAX, which is not a GAAP measure, excludes exploration expense, as exploration expense is not an indicator of
operating efficiency for a given reporting period, but is monitored by management as part of costs incurred in exploration and development
activities. Similarly, DD&A expense 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. The Company’s definition of Adjusted EBITDAX also
excludes interest expense to allow for assessment of segment operating results without regard to Anadarko’s financing methods or capital
structure. 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 shareholders.
Adjusted EBITDAX, as defined by Anadarko, may not be comparable to similarly titled measures used by other companies. Therefore,
Anadarko’s consolidated Adjusted EBITDAX should be considered in conjunction with income from continuing operations and other
performance measures prepared in accordance with GAAP, such as operating income or cash flow from operating activities. Adjusted
EBITDAX has important limitations as an analytical tool because it excludes certain items that affect income from continuing operations and
net cash
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provided by operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Anadarko’s
results as reported under GAAP. Below is a reconciliation of consolidated Adjusted EBITDAX to income from continuing operations before
income taxes.
Adjusted EBITDAX
∆ ∆
vs. vs.
Income from continuing operations before income taxes $ 5,346 $ 6,329 (16)% $3,737 69%
Exploration expense 1,369 905 51 737 23
Depreciation, depletion and amortization expense 3,194 2,840 12 1,752 62
Impairments 223 51 337 327 (84)
Interest expense 742 1,092 (32) 650 68
Consolidated Adjusted EBITDAX $10,874 $11,217 (3) $7,203 56
Adjusted EBITDAX by segment—
Oil and gas exploration and production $10,917 $10,637 3 $7,350 45
Midstream 428 894 (52) 183 389
Marketing 39 234 (83) 78 200
Other and intersegment eliminations (510) (548) 7 (408) (34)
Oil and Gas Exploration and Production The increase in Adjusted EBITDAX for 2008 compared to 2007 was primarily due to the impact of
higher commodity prices and higher sales volumes primarily in the Rockies and the Gulf of Mexico, partially offset by a decrease in gains on
divestitures and other, net of $3.1 billion and lower sales volumes as a result of the 2007 divestitures. The increase in Adjusted EBITDAX for
2007 compared to 2006 was primarily due to an increase in gains on divestitures of $4.1 billion and higher sales volumes, partially offset by the
impact of lower natural gas and oil and condensate prices and higher costs and expenses, including the Algerian exceptional profits tax. The
Company’s sales revenues include the impact of price risk management activities (including realized and unrealized gains and losses) which
increased oil and gas revenues $586 million during 2008, compared to a decrease of $472 million in 2007 and an increase of $1,131 million in
2006. Of these amounts for 2008, 2007, and 2006 $892 million, $(1,048) million, and $837 million, respectively, were related to the recognition of
net unrealized gains (losses) on derivatives used to manage price risk on natural gas, crude oil, condensate and NGLs sales.
Midstream The decrease in Adjusted EBITDAX for 2008 compared to 2007 resulted primarily from a decrease in gains on divestitures and
other, net of $531 million and lower volumes as a result of the 2007 divestitures, partially offset by higher product prices and gathering rates.
The increase in Adjusted EBITDAX for 2007 compared to 2006 resulted primarily from an increase in gains on divestitures of $532 million
related to midstream assets and an increased scope of midstream operations resulting from the 2006 acquisitions, partially offset by a decrease
in earnings associated with the 2007 divestitures. During July 2007, the Company divested its interests in two natural gas gathering systems
and associated processing plants that did not operate in areas where Anadarko has significant oil and gas production. These divested
facilities accounted for $75 million, or 21%, of Anadarko’s midstream segment’s Adjusted EBITDAX excluding gains on divestitures during
2007.
Marketing Marketing earnings primarily represent the margin earned on sales of gas, oil and NGLs purchased from third parties. The decrease
in Adjusted EBITDAX for 2008 compared to 2007 was primarily due to lower margins on firm transportation contracts and the write-down of
storage inventory due to lower commodity prices in the fourth quarter of 2008. The increase in Adjusted EBITDAX for 2007 compared to 2006,
resulted primarily from the effects of higher volumes transported as a result of the 2006 acquisitions.
Other and Intersegment Eliminations Other and intersegment eliminations consists primarily of corporate costs that are not allocated to the
operating segments and income from hard minerals investments and royalties. The increase in Adjusted EBITDAX for 2008 compared to 2007
was primarily due to a decrease in employee
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severance and termination benefits, a decrease in compensation expense, and a decrease in contract labor expense, partially offset by higher
benefit plans expense and impairment losses related to equity investments. The decrease in Adjusted EBITDAX for 2007 compared to 2006
was primarily due to increases in compensation expense from the increased average number of employees associated with the 2006
acquisitions.
Acquisitions and Divestitures

Acquisitions In August 2006, Anadarko acquired Kerr-McGee and Western in separate all-cash transactions. Anadarko initially financed $22.5
billion for the acquisitions through a 364-day committed acquisition facility with plans to repay it with proceeds from asset divestitures, free
cash flow from operations and the issuance of equity, debt and bank financing during the term of the facility. Through February 29, 2008, the
Company had repaid the initial amount financed under the acquisition facility of $22.5 billion using divestiture proceeds, long-term refinancing
and cash flow from operations.
Kerr-McGee Transaction On August 10, 2006, Anadarko completed the acquisition of Kerr-McGee for $16.5 billion, or $70.50 per share,
plus the assumption of $2.6 billion of debt.
Kerr-McGee’s legacy core properties are located in the deepwater Gulf of Mexico and onshore in Colorado and Utah. They include
deepwater Gulf of Mexico blocks which are supported by Kerr-McGee’s “hub-and-spoke” infrastructure. In Colorado, Kerr-McGee held
acreage in the Wattenberg natural gas play, located largely on Anadarko’s Land Grant holdings, where Anadarko owns the royalty interest. In
Utah, Kerr-McGee held acreage in the Uinta basin’s prolific Greater Natural Buttes gas play. In addition to its U.S. portfolio, Kerr-McGee
produces oil and is continuing to develop and explore offshore China, has made discoveries offshore Brazil, and is exploring West Africa and
the islands of Trinidad and Tobago.
Western Transaction On August 23, 2006, Anadarko completed the acquisition of Western for $4.8 billion, or $61.00 per share, plus the
assumption of $625 million of debt.
Western’s CBM properties within the Powder River basin are directly adjacent to Anadarko’s assets in this developing play. Anadarko
believes that combining its properties with Western’s accelerated the development of these natural gas resources and will produce volume
growth through the end of the decade, and possibly longer, with more than 12,000 identified drilling locations in inventory. The acquisition of
Western also significantly increased the Company’s holdings in gathering and processing systems.
Divestitures As a result of a portfolio refocusing effort stemming from the acquisitions of Kerr-McGee and Western, Anadarko divested
certain properties during 2007 and 2006 for approximately $17 billion before income taxes. Net proceeds from these divestitures were used to
retire debt.
During 2006, Anadarko sold its wholly-owned subsidiary, Anadarko Canada Corporation, for approximately $4 billion before taxes. See
Discontinued Operations. On the acquisition date, Kerr-McGee’s other assets included approximately $1 billion of assets held for sale. The
sale of these assets closed in August 2006 and the proceeds were also used to pay down debt incurred to fund the acquisitions.
During 2007, the Company closed several unrelated divestiture transactions representing approximately $11 billion before income taxes.
The most significant of these transactions are discussed below.
In January 2007, the Company sold its interests in the Knotty Head and Big Foot oil discoveries, as well as the Big Foot North prospect
in the Gulf of Mexico, for $0.9 billion. During February 2007, Anadarko also closed the sale of its Genghis Khan discovery in the deepwater
Gulf of Mexico for $1.3 billion. In March 2007, Anadarko divested control of its interests in 28 Permian basin oil and gas fields in West Texas
for $1.0 billion (see Off-Balance Sheet Arrangements), sold its Vernon and Ansley fields located in Jackson Parish, Louisiana, for $1.5 billion
and sold substantially all of its interests in the Elk basin and Gooseberry area of the Northern Rockies for $0.4 billion.
In April 2007, Anadarko sold its interests in the Williston basin area of the Northern Rockies for $0.4 billion. In May 2007, Anadarko sold
its interests in certain natural gas properties in Oklahoma and Texas for $0.9 billion and also sold a 23% working interest in the K2 Unit in the
Gulf of Mexico for $1.2 billion. Anadarko remains the K2 Unit operator with a 42% working interest. In June 2007, Anadarko sold certain of its
interests in the Austin Chalk play in central and east Texas for $0.8 billion.
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In July 2007, the Company divested control of its interests in the Chaney Dell and Midkiff/Benedum natural gas gathering systems and
associated processing plants for $1.9 billion (see Off-Balance Sheet Arrangements below).
In October 2007, the Company divested certain interests in Qatar for approximately $350 million.
In 2008, the Company divested certain oil and gas properties, primarily in Brazil, onshore in the United States and the Gulf of Mexico for
approximately $2.5 billion. Proceeds from divestitures in 2008 were used to reduce debt.
In April 2008, Anadarko entered into an agreement to sell a wholly-owned subsidiary, which owns an 18% interest in Petroritupano, S.A.
(Petroritupano), a Venezuelan mixed company whose other shareholders are Petróleos de Venezuela, S.A. (PDVSA) and Petrobras Energía,
S.A., for $200 million. The closing of this transaction was subject to customary closing conditions, including receipt of approvals by
Venezuelan authorities. Anadarko has been informed by the Venezuelan Ministry of Energy and Petroleum that it will not grant approval of the
sale transaction because PDVSA intends to acquire Anadarko’s equity interest in Petroritupano. Anadarko has subsequently received a letter
from Corporacion Venezolana del Petroleo, S.A. (CVP), an affiliate of PDVSA, in which CVP states its interest in acquiring Anadarko’s equity
interest in Petroritupano. At this time, Anadarko is unable to determine when the sale to CVP may be consummated. Anadarko’s investment in
Petroritupano is included in other assets at December 31, 2008.
For additional information, see Note 2—Acquisitions, Divestitures and Other under Item 8 of this Form 10-K.
Proved Reserves Anadarko focuses on growth and profitability. Reserve replacement is a key to growth. Future profitability depends partially
upon the cost of finding and developing oil and gas reserves, among other factors. Reserve growth can be achieved through successful
exploration and development drilling, improved recovery or acquisition of producing properties.
In conjunction with the August 2006 acquisition of Kerr-McGee and Western, Anadarko implemented an asset realignment program. The
goal of the Kerr-McGee and Western acquisitions was to provide a more economically efficient platform with higher and more consistent
growth potential, with the intent of divesting properties that were no longer deemed to be core to Anadarko’s operations. During 2007, the
Company successfully completed the majority of the divestiture stage of the realignment program. As expected, Anadarko’s proved reserves
at the end of 2007 were about equal to levels before the acquisitions.
The following discussion of proved reserves, reserve additions and revisions and future net cash flows from proved reserves includes
both continuing and discontinued operations. A breakdown of reserve information by continuing and discontinued operations is contained in
the Supplemental Information under Item 8 of this Form 10-K.
MMBOE 2008 2007 2006

Proved Reserves
Beginning of year 2,431 3,011 2,449
Reserve additions and revisions 188 252 1,043
Sales in place (137) (620) (287)
Production (205) (212) (194)
End of year 2,277 2,431 3,011
Proved Developed Reserves
Beginning of year 1,625 1,989 1,524
End of year 1,600 1,625 1,989
The Company’s proved natural gas reserves at year-end 2008 were 8.1 Tcf compared to 8.5 Tcf at year-end 2007 and 10.5 Tcf at year-end
2006. Anadarko’s proved crude oil, condensate and NGLs reserves at year-end 2008 were 0.9 billion barrels compared to 1.0 billion barrels at
year-end 2007 and 1.3 billion barrels at year-end 2006. Crude oil, condensate and NGLs comprised about 41%, 42% and 42% of the Company’s
proved reserves at year-end 2008, 2007 and 2006 respectively.
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The Company’s estimates of proved reserves are made using available geological and reservoir data as well as production performance
data. These estimates, made by the Company’s engineers, are reviewed annually and revised, either upward or downward, as warranted by
additional data. The available data reviewed include, among other things, seismic data, structure and isopach maps, well logs, production
tests, material balance calculations, reservoir simulation models, reservoir pressures, individual well and field performance data, individual well
and field projections, offset performance data, operating expenses, capital costs and product prices. Revisions are necessary due to changes
in, among other things, reservoir performance, prices, economic conditions and governmental restrictions, as well as changes in the expected
recovery rates associated with infill drilling. Sustained decreases in prices, for example, may cause a reduction in some proved reserves due to
reaching economic limits sooner.
Reserve Additions and Revisions During 2008, the Company added 188 MMBOE of proved reserves as a result of additions (purchases in
place, discoveries, improved recovery and extensions) and revisions. The Company expects the majority of future reserve adds to come from
positive revisions associated with infill drilling and extensions of current fields and new discoveries onshore in North America and the
deepwaters of the Gulf of Mexico, as well as through improved recovery operations, purchases of proved properties in strategic areas and
successful exploration in international growth areas. The success of these operations will directly impact reserve additions or revisions in the
future.
Additions During 2008, Anadarko added 102 MMBOE of proved reserves primarily as the result of successful drilling in the Rockies and
developments and appraisals in the deepwater Gulf of Mexico. During 2007, Anadarko added 131 MMBOE of proved reserves. Of this amount,
130 MMBOE were as a result of successful drilling in CBM and conventional plays of the Rockies and the initial recognition of proved
reserves at the Peregrino field in Brazil. During 2006, Anadarko added 1,118 MMBOE of proved reserves. Of this amount, 1,030 MMBOE were
related to purchases in place primarily associated with the acquisitions of Kerr-McGee and Western in August 2006. In addition, the Company
added 88 MMBOE of proved reserves primarily as a result of successful drilling in core areas onshore in the United States.
Revisions Total revisions in 2008 were 86 MMBOE or 3.5% of the beginning of year reserve base. The revisions included an increase of 188
MMBOE primarily related to the large onshore natural gas plays, such as the Greater Natural Buttes, Wattenberg and Pinedale fields, as a
result of successful infill drilling, in addition to positive revisions to the Peregrino heavy-oil field, offshore Brazil, which was sold in 2008,
partially offset by a decrease of 102 MMBOE related to prices for oil and NGLs. Total revisions for 2007 were 121 MMBOE. Revisions in 2007
related primarily to the large onshore natural gas plays such as Greater Natural Buttes, Wattenberg, and Pinedale and Jonah fields, where the
reserve bookings for the infill wells are treated as a positive revision, and the increase in oil and natural gas prices. Total revisions for 2006
were (75) MMBOE. Revisions in 2006 related primarily to performance revisions of (136) MMBOE mainly due to downward revisions of the
Company’s reserves at the K2 complex in the Gulf of Mexico and adjustments in Algeria, and price revisions of (99) MMBOE primarily due to a
significant decrease in natural gas prices since the end of 2005, partially offset by additional infill drilling reserve bookings of 160 MMBOE.
Sales in Place During 2008, the Company sold properties located in the United States and Brazil representing 46 MMBOE and 91 MMBOE of
proved reserves, respectively. In 2007, the Company sold properties located in the United States and Qatar representing 609 MMBOE and 11
MMBOE of proved reserves, respectively. In 2006, the Company sold properties located in Canada representing 248 MMBOE of proved
reserves. In addition, sales in place included 39 MMBOE of proved reserves related to government imposed contract changes which resulted
in the Company’s Venezuelan properties being exchanged for an equity interest in a new Venezuela operating entity.
Future Net Cash Flows At December 31, 2008, the present value (discounted at 10%) of future net cash flows from Anadarko’s proved
reserves was $12.0 billion (stated in accordance with the regulations of the SEC and the Financial Accounting Standards Board (FASB)). This
present value was calculated based on prices at year-end
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held flat for the life of the reserves, adjusted for any contractual provisions. The decrease of $16.9 billion or 59% in 2008 compared to 2007 is
primarily due to lower commodity prices at year-end 2008. See Supplemental Information under Item 8 of this Form 10-K.
The present value of future net cash flows does not purport to be an estimate of the fair market value of Anadarko’s proved reserves. An
estimate of fair value would also take into account, among other things, anticipated changes in future prices and costs, the expected recovery
of reserves in excess of proved reserves and a discount factor more representative of the time value of money and the risks inherent in
producing oil and gas.
Midstream Strategies
Anadarko invests in midstream (gathering, treating and processing) facilities to complement its oil and gas operations in regions where
the Company has natural gas production. The Company is better able to control the timing of development of its oil and gas properties and
manage both the value received for, and cost of, gathering, treating and processing natural gas through its ownership and operation of these
facilities. In addition, Anadarko’s midstream business provides gathering, treating and processing services for third-party customers,
including major and independent producers. Anadarko generates revenues in its gathering and processing activities through various fee
structures that include fixed-rate, percent of proceeds, or keep-whole agreements. The Company also processes a portion of its gas at various
third-party plants.
In 2006, Anadarko significantly increased the size and scope of its midstream business through the acquisitions of Western and Kerr-
McGee. Anadarko has 29 systems in seven states (Wyoming, Colorado, Utah, New Mexico, Kansas, Oklahoma and Texas) located in major
producing basins of the onshore United States.
In December 2007, a midstream subsidiary issued a $2.2 billion note payable to a related party. At December 31, 2008, the midstream note
payable to a related party had an outstanding balance of $1.7 billion, which is guaranteed by Anadarko. See Note 10—Debt and Interest
Expense of the Notes to Consolidated Financial Statements under Item 8 and Debt below for additional information.
During the second quarter of 2008, WES completed its initial public offering of 20.8 million common units for net proceeds of $321 million
($343 million less $22 million for underwriting discounts and structuring fees). WES is a Delaware limited partnership formed by Anadarko to
own, operate, acquire and develop midstream assets. Anadarko contributed assets to WES in exchange for an aggregate 59.6% limited partner
interest (consisting of common and subordinated limited partner units) in WES, a 2% general partner interest and IDRs. IDRs entitle the holder
to specified increasing percentages of cash distributions as WES’s per-unit cash distributions increase. In addition, Anadarko maintains
control over the assets owned by WES through sole indirect ownership of the general partner interests. Proceeds from the initial public
offering were used to reduce debt.
Marketing Strategies
The Company’s marketing department actively manages sales of its natural gas, crude oil and NGLs. The Company’s sales of natural gas,
crude oil, condensate and NGLs are generally made at the market prices of those products at the time of sale. In 2008, the Company also
engaged in sales of greenhouse gas ERCs derived from CO2 injection operations in Wyoming. The Company expects additional sales of ERCs
in the future.
The Company also purchases natural gas, crude oil, condensate and NGLs volumes for resale primarily from partners and producers near
Anadarko’s production. These purchases allow Anadarko to aggregate larger volumes, fully utilize transportation capacity, attract larger,
creditworthy customers and facilitate its efforts to maximize prices received for the Company’s production and minimize balancing issues with
customers and pipelines during operational disruptions.
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The Company may also engage in trading activities for the purpose of generating profits from exposure to changes in market prices of
natural gas, crude oil, condensate and NGLs. The Company does not engage in market-making practices and limits its trading activities to
natural gas, crude oil and NGLs commodity contracts. The Company’s trading risk position, typically, is a net short position that is offset by
the Company’s natural long position as a producer. See Energy Price Risk under Item 7A of this Form 10-K.
In an effort to protect the Company from commodity price risk stemming from the 2006 acquisitions, the Company entered into
derivatives covering 72% and 55% of the acquired companies’ then expected production volumes for 2007 and 2008, respectively. This price
risk management program employed collars and other derivatives intended to help ensure a return on investment while maintaining upside
potential that could result from higher commodity prices. In the past year, almost all segments of the global economy have experienced a
downturn. This downturn, along with the commodity price volatility, have made the creditworthiness, liquidity and financial position of the
Company’s counterparties increasingly difficult to evaluate. For this reason, the Company has placed an increased emphasis on the
monitoring of counterparty risk. Although Anadarko has not experienced any material financial losses associated with credit deterioration of
third parties, in certain situations the Company has declined to transact with some counterparties and changed its sales terms to require some
counterparties to pay in advance or post letters of credit for purchases.
Natural Gas Natural gas continues to fulfill a significant portion of North America’s energy needs and the Company believes the importance
of natural gas in meeting this energy need will continue. Natural gas prices have varied over the last year, with the first three quarters of the
year averaging higher than corresponding quarters in 2007 and a year-on-year decrease in the last quarter of 2008. Price volatility persists due
to an increase in supply stemming principally from unconventional gas coupled with a decrease in domestic industrial demand. Anadarko
markets its natural gas production to maximize the commodity value and reduce the inherent risks of the physical commodity markets.
Anadarko Energy Services Company, a wholly-owned subsidiary of Anadarko, is a marketing company offering supply assurance, competitive
pricing, risk management and other services tailored to its customers’ needs. The Company sells natural gas under a variety of contracts and
may also receive a service fee related to the level of reliability and service required by the customer. The Company has the marketing capability
to move large volumes of gas into and out of the “daily” gas market to take advantage of any price volatility.
The Company owns a significant amount of natural gas firm transportation capacity that is used to help ensure access to downstream
markets which increases the ability to produce the Company’s natural gas. This transportation capacity also provides the opportunity to
capture incremental value when pricing differentials between physical locations occur. The Company also stores some of its purchased natural
gas in contracted storage facilities with the intent of selling the gas at a higher price in the future. Normally, the Company will have forward
contracts in place (physical delivery or financial derivative instruments) to sell the stored gas at a fixed price. The Company also utilizes these
storage facilities to minimize operational disruptions to its ongoing operations.
Crude Oil, Condensate and NGLs Anadarko’s crude oil, condensate and NGLs revenues are derived from production in the United States
(U.S.), Algeria, China and other international areas. Most of the Company’s U.S. crude oil and NGLs production is sold under contracts with
prices based on market indices, adjusted for location, quality and transportation. Oil from Algeria is sold by tanker as Saharan Blend to
customers primarily in the Mediterranean area. Saharan Blend is a high quality crude that provides refiners large quantities of premium
products such as jet and diesel fuel. Oil from China is sold by tanker as Cao Fei Dian (CFD Blend) to customers primarily in the Far East
markets. CFD Blend is a heavy sour crude oil which is sold into both the prime fuels refining market and the heavy fuel oil blend stock market.
The Company also purchases and sells third-party produced crude oil, condensate and NGLs in the Company’s domestic and international
market areas. Included in this strategy is the use of contracted NGLs storage facilities. The Company utilizes this storage to capture market
opportunities and to help minimize fractionation and downstream infrastructure disruptions.
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Liquidity and Capital Resources

Overview Anadarko’s primary sources of cash during 2008 were cash flow from operating activities, proceeds from divestitures and the initial
public offering of WES. The Company used cash primarily to fund Anadarko’s capital spending program, retire debt, pay income taxes,
repurchase Anadarko common stock, pay dividends and redeem preferred stock. Anadarko’s primary sources of cash during 2007 were
divestiture transactions, cash flow from operating activities and proceeds from the midstream subsidiary note to a related party. The Company
used cash primarily to retire debt, fund Anadarko’s capital spending program and pay income taxes and dividends. Anadarko’s primary
sources of cash during 2006 were the issuance of debt, cash flow from operating activities and divestitures. During 2006, the Company used
cash primarily to fund the acquisitions of Kerr-McGee and Western, fund its capital spending program, repurchase Anadarko common stock,
pay dividends and retire debt as well as preferred stock.
The downturn in the global economy, along with the turmoil in the financial markets and reduced availability to capital, have increased
the importance of maintaining ample liquidity. The pace with which the downturn has occurred made the evaluation of the Company’s lenders
creditworthiness, liquidity and financial position increasingly difficult. For this reason, the Company has increased its diligence in monitoring
its lenders’ funding capabilities. The Company has in place a $1.3 billion RCA and as of December 31, 2008, the Company had no outstanding
borrowings under its RCA. The Company may choose to refinance certain portions of its short-term borrowings by issuing long-term debt in
the public or private debt markets. To facilitate such financings, the Company may sell securities under its shelf registration statement filed
with the SEC in September 2006.
The Company continuously monitors its debt position and coordinates its capital expenditure program with expected cash flows and
projected debt repayment schedules. The Company will continue to evaluate funding alternatives, including property divestitures and
additional borrowings, to secure funds when needed.
Following is a discussion of significant sources and uses of cash flows during the period. Forward-looking information related to the
Company’s liquidity and capital resources are discussed in Outlook that follows.
Sources of Cash
Cash Flow from Operating Activities Anadarko’s cash flow from continuing operating activities in 2008 was $6.4 billion compared to $2.8
billion in 2007 and $4.7 billion in 2006. The increase in 2008 cash flow was attributed to higher commodity prices and lower estimated income
tax payments in 2008 compared to 2007 primarily related to the 2007 divestitures, partially offset by the effect of lower sales volumes primarily
associated with the 2007 divestitures, and realized derivative losses in 2008. The decrease in 2007 cash flow from continuing operations
compared to 2006 was attributed to the impact of income taxes on divestitures and higher costs and expenses, partially offset by the impact of
higher sales volumes associated with the acquisitions.
Excluding the impact of acquisitions and divestitures, fluctuations in commodity prices have been the primary reason for the Company’s
short-term changes in cash flow from operating activities. Anadarko holds derivative instruments to help manage commodity price risk. Sales
volume changes can also impact cash flow in the short-term, but have not been as volatile as commodity prices in prior years. Anadarko’s
long-term cash flow from operating activities is dependent on commodity prices, reserve replacement, the level of costs and expenses required
for continued operations and the level of acquisition and divestiture activity.
Divestitures In 2008, Anadarko received proceeds of $2.5 billion from divestitures of certain oil and gas properties primarily in Brazil, onshore
in the United States and the Gulf of Mexico. Proceeds from divestitures in 2008 were used to reduce debt. During 2007, Anadarko received
proceeds of $11.1 billion from its divestiture program. Proceeds from the divestitures in 2007 were used to reduce debt and pay income taxes on
taxable gains associated with the divestitures. See Acquisitions and Divestitures.
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Master Limited Partnership Initial Public Offering During the second quarter of 2008, WES completed its initial public offering of 20.8 million
common units for net proceeds of $321 million. WES is a Delaware limited partnership formed by Anadarko to own, operate, acquire and
develop midstream assets. See Note 3-Minority Interests under Part II, Item 8 of this Form 10-K. Proceeds from the offering were used to
reduce debt.
Pursuant to the terms of its partnership agreement, WES is required to pay a minimum quarterly distribution of $0.30 per unit to the extent
it has sufficient cash available for distribution. During the third quarter of 2008, WES paid a prorated quarterly cash distribution of $0.1582 per
unit for the second quarter of 2008, which corresponds to a quarterly distribution of $0.30 per unit on a full quarter basis. In the fourth quarter
of 2008, WES paid a quarterly cash distribution of $0.30 per unit for the third quarter of 2008. On January 28, 2009, WES declared a quarterly
cash distribution of $0.30 per unit for the fourth quarter of 2008 to be paid on February 13, 2009.
Margin Deposits The Company is required to provide margin deposits whenever its unrealized losses on derivative transactions with a
counterparty exceed predetermined credit limits, and in some cases only until negotiated maximum limits are reached. Both exchange and over-
the-counter traded derivative instruments may be subject to margin deposit requirements. Given the Company’s price risk management
position and price volatility, the Company may be required from time to time to deposit cash with or provide letters of credit to its
counterparties in order to satisfy these deposit requirements. The Company manages its exposure to margin requirements through negotiated
credit arrangements with counterparties, which may include collateral caps. If credit thresholds are exceeded, the Company utilizes available
cash or letters of credit to satisfy margin requirements and maintains ample available committed credit facilities to meet its obligations. The
Company’s current derivative positions continue to ratably settle such that the Company’s working capital along with its RCA could
withstand margin calls resulting from a significant increase in commodity prices. The Company had net margin deposits (cash collateral) of $7
million and $51 million outstanding at December 31, 2008 and 2007, respectively. See Note 1—Summary of Significant Accounting Policies and
Note 8—Derivative Instruments of the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.
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Uses of Cash
Capital Expenditures The following table shows the Company’s capital expenditures relating to continuing operations by category.
millions 2008 2007 2006

Property acquisitions
Exploration—unproved $ 405 $ (293) $ 13,372
Development—proved 26 (591) 14,496
Exploration 1,031 834 806
Development 3,530 2,805 3,084
Total oil and gas costs incurred* 4,992 2,755 31,758
Less: Corporate acquisitions and non-cash property exchanges (106) 1,001 (27,491)
Less: Asset retirement costs (263) (194) (158)
Less: Geological and geophysical, exploration overhead and delay rentals expenses and other (344) (261) (254)
Less: Amortization of acquired drilling rig contract intangibles (5) (86) —
Total oil and gas capital expenditures 4,274 3,215 3,855
Gathering, processing and marketing and other 607 775 357
Total capital expenditures* $4,881 $3,990 $ 4,212
* Oil and gas costs incurred represent costs related to finding and developing oil and gas reserves. Capital expenditures represent additions
to property and equipment excluding corporate acquisitions, property exchanges and asset retirement costs. Capital expenditures and cost
incurred are presented on an accrual basis. Additions to properties and equipment on the consolidated statement of cash flows include
certain adjustments that give effect for the timing of actual cash payments in order to represent a cash basis.
Anadarko’s capital expenditures increased 22% in 2008 compared to 2007. The Company’s capital spending decreased 5% in 2007
compared to 2006. The 2008 increase was due to an increase in development drilling expenditures primarily onshore in the U.S. and exploration
lease acquisition activity primarily offshore in the U.S., partially offset by a decrease in expenditures related to construction, and gathering and
processing facilities. The decrease in 2007 resulted primarily from a decrease in development drilling and construction expenditures and a
decrease in exploration lease acquisition activity, partially offset by an increase in capital expenditures on gathering and processing facilities.
Additionally, all of the periods were impacted by rising service and material costs. The variances in the mix of oil and gas spending reflect the
Company’s available opportunities based on the near-term ranking of projects by net asset value potential.
The property acquisitions in 2008 primarily related to exploratory nonproducing leases. Proved property acquisitions and unproved
property acquisitions in 2007 include adjustments of $(600) million and $(484) million, respectively, related to finalizing the allocation of fair
value to oil and gas properties acquired from Kerr-McGee and Western in 2006. The property acquisitions in 2006 related primarily to Kerr-
McGee and Western.
Anadarko participated in a total of 2,838 gross wells in 2008 compared to 1,823 gross wells in 2007 and 1,537 gross wells in 2006.
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See Outlook below for information regarding sources of cash used to fund capital expenditures for 2009.
The following table provides additional detail of the Company’s drilling activity in 2008, 2007 and 2006.
Gas Oil Dry Total

2008 Exploratory
Gross 13 3 12 28
Net 9.8 2.3 6.2 18.3
2008 Development
Gross 2,632 166 12 2,810
Net 1,443.7 127.3 8.4 1,579.4
2007 Exploratory
Gross 33 1 21 55
Net 18.1 0.3 8.0 26.4
2007 Development
Gross 1,727 34 7 1,768
Net 894.7 12.0 2.4 909.1
2006 Exploratory
Gross 56 7 13 76
Net 34.6 3.6 5.7 43.9
2006 Development
Gross 1,183 272 6 1,461
Net 631.6 205.6 2.2 839.4
Gross: total wells in which there was participation.

Net: working interest ownership.
The Company’s 2008 exploration and development drilling program is discussed in Oil and Gas Properties and Activities under Item 1 of
this Form 10-K.
Debt At year-end 2008, Anadarko’s total debt was $12.3 billion compared to total debt of $14.7 billion at year-end 2007 and $23.0 billion at year-
end 2006. As of December 31, 2007, current debt included $1 billion under a variable-rate 354-day facility. This facility was fully repaid and
concurrently retired in February 2008. Also in 2008, the Company retired $580 million aggregate principal amount of Floating Rate Notes due
September 2009. In 2008 the Company repaid an aggregate principal amount of $2.4 billion of debt (including the variable-rate 354-day facility)
that was outstanding at December 31, 2007.
In March 2008, the Company entered into a $1.3 billion, five-year RCA with a syndicate of United States and foreign lenders. Under the
terms of the RCA, the Company can, under certain conditions, request an increase in the borrowing capacity under the RCA up to a total
available credit amount of $2.0 billion. The RCA has a maximum 65% debt to total book capitalization covenant (excluding non-cash charges).
The RCA terminates in March 2013. The RCA replaced a $750 million revolving credit facility which was scheduled to mature in 2009 and was
retired. As of December 31, 2008, the Company had no outstanding borrowings under the RCA. Anadarko was in compliance with existing
covenants and the full amount of the RCA was available for borrowing at December 31, 2008.
The Company plans to repay current debt of $1.5 billion outstanding at December 31, 2008 with cash on hand, cash flow from operations
and, if necessary, funds available under the $1.3 billion RCA or debt refinancing.
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The following table shows the Company’s debt-to-capital ratio.
December 31, December 31,

millions except percentages 2008 2007
Current debt $ 1,472 $ 1,396
Long-term debt 9,128 11,151
Total debt excluding related party debt 10,600 12,547
Midstream subsidiary note payable to a related party 1,739 2,200
Total debt $ 12,339 $ 14,747
Equity $ 18,795 $ 16,364
Debt-to-capital ratio 39.6% 47.4%
In January 2008, Anadarko entered into forward-looking 18-month interest rate swaps effective March 2008 with an aggregate notional
principal amount of $1.0 billion whereby the Company will pay a weighted-average fixed interest rate of 2.74% and receive a floating interest
rate indexed to the three-month LIBOR rate. Anadarko discontinued hedge accounting on January 1, 2007, therefore all gains and losses
associated with these swaps will be recorded to interest expense.
In anticipation of the refinancing of existing debt obligations, Anadarko entered into swaps to fix interest rates and in doing so mitigated
a portion of the risk it had to unfavorable interest rate changes prior to the future issuance of debt. In December 2008, Anadarko entered into
three-year forward-looking 10-year swap agreements with a combined notional principal amount of $400 million, a three-year forward-looking
30-year swap agreement with a notional principal amount of $100 million, and four-year forward-looking 30-year swap agreements with a
combined notional principal amount of $250 million. Under each of these agreements, the Company will pay a fixed interest rate and receive a
floating interest rate indexed to the three-month LIBOR rate.
In January 2009, Anadarko entered into three-year forward-looking 10-year swap agreements with a combined notional principal amount
of $350 million, three-year forward-looking 30-year swap agreements with a combined notional principal amount of $1.15 billion, four-year
forward-looking 10-year swap agreements with a combined notional principal amount of $250 million, and four-year forward-looking 30-year
swap agreements with a combined notional principal amount of $500 million. Under each of these agreements, the Company will pay a fixed
interest rate and receive a floating interest rate indexed to the three-month LIBOR rate.
For additional information on the Company’s debt instruments, such as transactions during the period, years of maturity and interest
rates, see Note 8—Derivative Instruments and Note 10—Debt and Interest Expense of the Notes to Consolidated Financial Statements
under Item 8 of this Form 10-K.
Midstream Subsidiary Note Payable to a Related Party In December 2007, Anadarko and an entity formed by a group of unrelated third-party
investors (the Investor) formed Trinity Associates LLC (Trinity). As discussed in Note 6—Investments of the Notes to Consolidated
Financial Statements under Item 8 of this Form 10-K, Trinity was initially capitalized with a $100 million cash contribution from Anadarko in
exchange for Class A member and managing member interests in Trinity and a $2.2 billion cash contribution from the Investor in exchange for a
Class B member cumulative preferred interest. Trinity invested $100 million in a U.S. Government securities money market fund and loaned $2.2
billion to a wholly-owned subsidiary of Anadarko, Midstream Holding. The Company used all of the loan proceeds received by Midstream
Holding to repay a portion of the Company’s acquisition facility indebtedness. The principal balance owed by Midstream Holding to Trinity is
reflected in the consolidated balance sheet as Midstream Subsidiary Note Payable to a Related Party. Midstream Holdings may repay the loan
in whole or in part at any time prior to maturity. Initially, Midstream Holding’s obligations under the loan agreement were not guaranteed by
Anadarko Petroleum Corporation, but were unconditionally guaranteed, jointly and severally, by all of Midstream Holding’s subsidiaries.
In December 2008, Anadarko provided an unconditional parental guaranty for the payment of principal and interest on the remaining
balance of the Midstream Subsidiary Note Payable to a Related Party in exchange for
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the removal of various covenants in the loan agreement. The guaranty is also jointly and severally guaranteed by certain midstream
subsidiaries. Midstream Holding was in compliance with all previously existing covenants as of the date the Anadarko parental guaranty was
provided. The Midstream Subsidiary Note Payable to a Related Party will have the same priority with respect to the payment of principal and
interest as Anadarko’s other debt. At December 31, 2008, the Midstream Note Payable to a Related Party had an outstanding balance of $1.7
billion.
Common Stock Repurchase Program In August 2008, the Company announced a $5 billion share-repurchase program under which shares
may be repurchased either in the open market or through privately negotiated transactions. The program is authorized to extend through
August 2011 and replaces the $1 billion stock buyback program authorized in 2005. The repurchase program does not obligate Anadarko to
acquire any specific number of shares and may be discontinued at any time. During 2008 and 2006, Anadarko purchased 10.0 million and
2.5 million shares of common stock for $600 million and $118 million, respectively, under these programs through purchases in the open market
and under share-repurchase agreements. During 2007, no shares were repurchased under the program in effect at that time.
Dividends In 2008, 2007 and 2006, Anadarko paid $170 million, $170 million and $167 million, respectively, in dividends to its common
stockholders (nine cents per share per quarter). Anadarko has paid a dividend to its common stockholders continuously since becoming an
independent company in 1986. The amount of future dividends for Anadarko common stock will depend on earnings, financial conditions,
capital requirements and other factors, and will be determined by the Board of Directors on a quarterly basis.
The covenants in the Company’s credit agreement provide for a maximum capitalization ratio of 65% debt, exclusive of the effect of any
non-cash write-down’s. Although the covenants of the agreement do not specifically restrict the payment of dividends, the Company could be
limited in the amount of dividends it could pay in order to stay below the maximum capitalization ratio. Based on these covenants as of
December 31, 2008, retained earnings of approximately $12.3 billion were not limited as to the payment of dividends.
In 2008, 2007 and 2006, Anadarko paid $1 million, $3 million and $3 million, respectively, in preferred stock dividends. The preferred stock
was redeemed and subsequently retired in the second quarter of 2008.
Outlook The Company’s goals include continuing to find or acquire high-margin oil and gas reserves at competitive prices while keeping
operating costs at efficient levels.
Anadarko’s strategy involves developing its portfolio of primarily unconventional resources that give the Company a stable base of
capital-efficient, predictable and repeatable development opportunities to consistently grow the Company at competitive rates. Exploring in
high-potential, proven and emerging basins worldwide provides the Company with differential growth. Anadarko’s exploration success
creates value by expanding its future resource potential, while providing the flexibility to manage risk by monetizing discoveries.
The Company has an approved 2009 capital spending budget, including expensed geology and geophysics costs, of approximately $4.0
billion to $4.5 billion. The Company has allocated about 70% of capital spending to development activities, 20% to exploration activities and
10% to gas gathering and processing activities and other items. The Company expects capital spending by area to be approximately 30% for
the Rockies, 15% for the Southern region, 20% for the Gulf of Mexico, 25% for International and Alaska and 10% for Midstream and other.
Primary emphasis will be on production growth in the Rockies and continued development in the Gulf of Mexico, exploration, appraisal and
development wells in Ghana and in Algeria. Production is expected to begin in Ghana in late 2010. The Company’s capital discipline strategy is
to set capital activity at levels that can be funded with operating cash flows and existing cash on hand. Anadarko believes that its expected
level of cash flow and cash on hand will be sufficient to fund the Company’s projected operational program for 2009.
In addition, to support 2009 cash flows, Anadarko has implemented price risk management on approximately 24% of its anticipated
natural gas wellhead sales volumes and approximately 28% of its anticipated oil and condensate sales volumes for 2009.
If capital expenditures were to exceed operating cash flow, funds would be supplemented as needed by short-term borrowings. To
facilitate such borrowings, the Company has in place a $1.3 billion RCA and as of December 31, 2008, the Company had no outstanding
borrowings under its RCA. The Company may choose to
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refinance certain portions of its short-term borrowings by issuing long-term debt in the public or private debt markets. To facilitate such
financings, the Company may sell securities under its shelf registration statement filed with the SEC in September 2006.
The Company plans to repay current debt of $1.5 billion outstanding at December 31, 2008 with cash on hand, cash flow from operations
and, if necessary, funds available under the $1.3 billion RCA or debt refinancing.
The Company continuously monitors its debt position and coordinates its capital expenditure program with expected cash flows and
projected debt repayment schedules. The Company will continue to evaluate funding alternatives, including property divestitures and
additional borrowings, to secure funds when needed.
For additional information on factors that could impact Anadarko’s future results of operations, cash flows from operating activities or
financial position see Critical Accounting Estimates below and Risk Factors under Item 1A of this Form 10-K.
Off-Balance Sheet Arrangements

In 2007, Anadarko contributed certain of its oil and gas properties and gathering and processing assets, with an aggregate fair value of
approximately $2.9 billion at the time of contribution, to newly formed unconsolidated entities in exchange for noncontrolling mandatorily
redeemable interests in those entities. Subsequent to their formation, the investee entities loaned Anadarko an aggregate of $2.9 billion, which
the Company used to repay its acquisition-related debt. Anadarko has a legal right to setoff and intends to net-settle its obligations under
each of the notes payable to the investees and the distributable value of its interest in the corresponding investee. Accordingly, the $2.9
billion aggregate principal amount of such notes does not affect Anadarko’s reported debt balance, since the notes and the carrying amount
of Anadarko’s investments in the investees are presented on the consolidated balance sheet on a net basis. The related interest expense on
these obligations and Anadarko’s equity in earnings for Anadarko’s investment in these entities are recorded in other income (expense), net.
Note 6—Investments of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K provides additional information with
respect to each of these transactions. Completion of these transactions resulted in Anadarko divesting control of its interests in certain non-
core exploration and production and midstream assets and operations, while retaining a participating 5% interest in profits, losses and residual
value of the investees.
With respect to each investee, liquidation of the investee or redemption of Anadarko’s interest in the investee is expected to result in
Anadarko net-settling in cash its obligation under the corresponding note payable with the distributable value of its interest in the investee.
The Company does not currently expect such net settlement to have a material effect on its future financial condition, results of operations or
cash flows. Each of Anadarko’s noncontrolling interests in the investees is optionally redeemable by Anadarko or the controlling investor in
or after 2022 and is mandatorily redeemable in 2037.
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Obligations and Commitments

Following is a summary of the Company’s obligations as of December 31, 2008:
Obligations by Period
More
2-3 4-5 than 5
millions 1 Year Years Years Years Total
Total debt
Principal—current debt $ 1,472 $ — $ — $ — $ 1,472
Principal—long-term debt — 1,625 252 9,032 10,909
Midstream subsidiary note payable to a related party — — 1,739 — 1,739
Permian LLC and Midstream LLCs debt(1) — — — 2,853 2,853
Interest 659 1,208 967 7,366 10,200
Permian LLC and Midstream LLCs interest(1) 86 173 174 2,468 2,901
Operating leases
Drilling rig commitments 1,051 1,792 1,014 — 3,857
Production platforms 64 118 90 314 586
Other 78 123 59 55 315
Asset retirement obligations 16 213 147 992 1,368
Midstream and marketing activities 169 296 234 274 973
Oil and gas activities 470 436 142 95 1,143
Derivative liabilities 24 15 9 3 51
FIN 48 liabilities, interest and penalties(2) 56 56 — 42 154
Environmental liabilities 43 26 10 40 119
Total(3) $ 4,188 $6,081 $4,837 $23,534 $38,640
(1)
Anadarko has legal right of setoff and intends to net-settle its obligations under each of the notes payable to the investees and the
distributable value of its interest in the corresponding investee. Accordingly, the investment and the obligation are presented net on the
consolidated balance sheet and included in other long-term liabilities—other for all periods presented. The interest expense on these
obligations and Anadarko’s equity earnings for Anadarko’s investment in these entities are recorded in other income (expense), net. See
Note 6—Investments of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K and Off-Balance Sheet
Arrangements discussed above.
(2)
See Note 16—Income Taxes of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
(3)
This table does not include the Company’s pension or postretirement benefit obligations. See Note 22—Pension Plans, Other
Postretirement Benefits and Employee Savings Plans of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K
and Other below.
Operating Leases Operating lease obligations include several drilling rig commitments that qualify as operating leases. Over the past three
years, Anadarko has entered into several agreements to secure the necessary drilling rigs to execute its drilling strategy over several years. A
previous review of the Company’s worldwide deepwater drilling inventory, along with the tightening deepwater and onshore rig market
experienced in prior years, led Anadarko to secure the drilling rigs it needs to execute its strategy. The Company believes these rig-contracting
efforts offer compelling economics and facilitate its drilling strategy. The portion of lease payments associated with successful exploratory
wells and development wells, net of amounts billed to partners, will be capitalized as a component of oil and gas properties.
The Company also has $0.9 billion in commitments under noncancelable operating lease agreements for production platforms and
equipment, buildings, facilities and aircraft.
For additional information see Note 13—Commitments of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-
K.
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Asset Retirement Obligations Anadarko is obligated to dispose of long-lived assets upon their abandonment. The majority of Anadarko’s
asset retirement obligations relate to the plugging and abandonment of oil and gas properties. The asset retirement obligation (ARO) is
recorded at its estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligation
discounted at the Company’s credit-adjusted risk-free interest rate. Revisions to estimated AROs can result from changes in retirement cost
estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment.
Midstream and Marketing Activities Anadarko has entered into various transportation, storage and purchase agreements in order to access
markets and provide flexibility for the sale of its natural gas and crude oil in certain areas. The above table includes amounts related to these
commitments.
Oil and Gas Activities As is common in the oil and gas industry, Anadarko has various long-term contractual commitments pertaining to
exploration, development and production activities, which extend beyond the 2009 budget. The Company has work-related commitments for,
among other things, drilling wells, obtaining and processing seismic and fulfilling rig commitments. The preceding table includes long-term
drilling and work- related commitments of $1,143 million, comprised of $589 million in the United States, $80 million in Algeria and $474 million
in other international locations.
The Company also has option and swap contracts in place to manage price risk associated with a portion of its expected future sales of
its oil and gas production. Both exchange and over-the-counter traded derivative instruments are subject to margin deposit requirements.
Margin deposits are required of the Company whenever its unrealized losses on derivative instruments with a counterparty exceed
predetermined credit limits. Given the Company’s price risk management position and price volatility, the Company may be required from time
to time to advance cash to its counterparties in order to satisfy these margin deposit requirements. The Company had net margin deposits
(cash collateral) of $7 million outstanding at December 31, 2008.
Marketing and Trading Contracts The following tables provide information as of December 31, 2008 regarding the Company’s marketing and
trading portfolio of physical delivery and financially settled derivative instruments. See Critical Accounting Estimates for an explanation of
how the fair value for derivatives is calculated.
Marketing
millions and Trading
Fair value of contracts outstanding as of December 31, 2007—assets (liabilities) $ 11
Contracts realized or otherwise settled during 2008 (12)
Fair value of new contracts when entered into during 2008 1
Other changes in fair value 48
Fair value of contracts outstanding as of December 31, 2008—assets (liabilities) $ 48
Fair Value of Contracts as of December 31, 2008

Maturity Maturity
Assets (Liabilities) less than Maturity Maturity in excess
millions 1 Year 1-3 Years 4-5 Years of 5 Years Total
Marketing and Trading
Prices actively quoted $ 48 $ — $ — $ — $ 48
Environmental Anadarko is also subject to various environmental remediation and reclamation obligations arising from federal, state and local
laws and regulations. As of December 31, 2008, the Company’s balance sheet included a $119 million liability for remediation and reclamation
obligations, most of which were incurred by companies that Anadarko has acquired. The Company continually monitors the liability recorded
and the remediation and reclamation process, and believes the amount recorded is appropriate. For additional information see Legal
Proceedings—Environmental Matters under Item 3 of this Form 10-K.
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Other In 2008, the Company made contributions of $63 million to its funded pension plans, $13 million to its unfunded pension plans and $19
million to its unfunded other postretirement benefit plans. Contributions to the funded plans increase the plan assets while contributions to
unfunded plans are used for current benefit payments. Based on the impact of recent market volatility on the plan assets, the Company expects
to contribute up to $250 million to its funded pension plans, $23 million to its unfunded pension plans and $22 million to its unfunded other
postretirement benefit plans in 2009. Future contributions to funded pension plans will be affected by actuarial assumptions, market
performance and individual year funding decisions. The Company is unable to predict what contribution levels will be required beyond 2009
for the funded pension plans. The Company expects future payments for other postretirement benefit plans to be at levels similar to those
made in 2008.
For additional information on contracts, obligations and arrangements the Company enters into from time to time, see Note 10—Debt
and Interest Expense, Note 8—Derivative Instruments, Note 13—Commitments, and Note 14—Contingencies of the Notes to Consolidated
Financial Statements under Item 8 of this Form 10-K.
Discontinued Operations
In November 2006, Anadarko sold its wholly-owned subsidiary, Anadarko Canada Corporation, for approximately $4 billion before
income taxes. Accordingly, the Canadian oil and gas operations have been classified as discontinued operations in the consolidated
statements of income and cash flows. The following table summarizes selected data pertaining to discontinued operations.
millions except per share amounts 2008 2007 2006

Revenues and other $ — $ 24 $ 717
Income from discontinued operations $ — $ 18 $ 311
Gain on disposition of discontinued operations 98 8 2,494
Income from discontinued operations before income taxes 98 26 2,805
Income tax expense 35 15 530
Income from discontinued operations, net of taxes $ 63 $ 11 $2,275
Earnings per common share from discontinued operations—diluted $0.13 $0.02 $ 4.91
Annual sales volumes (MMBOE) — — 17
Cash flow provided by (used in) operating activities $ (5) $ 134 $ (178)
Capital expenditures $ — $— $ 537
Income from discontinued operations for 2008 and 2007 related primarily to the impact of an adjustment to an indemnity obligation
provided by the Company to the purchaser, as well as expenses associated with finalizing exit activities, discussed in Note 14—Contingencies
of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
Income from discontinued operations, net of tax, for 2007 decreased compared to 2006 primarily due to the gain on the sale of Canadian
operations recognized in 2006, which was partially offset by an increase in Canadian taxes associated with the gain on sale.
Under the Company’s initial 364-day term loan agreement, the Company was required to use net cash proceeds from significant
dispositions to repay debt. Because the Canadian assets were subject to this requirement, approximately $58 million of interest expense related
to the portion of debt that was repaid with proceeds from the sale of the Canadian operations is included in results of discontinued operations
for 2006.
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Critical Accounting Estimates

In preparing financial statements in accordance with GAAP, management makes informed judgments and estimates that affect the
reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses
during the reporting periods. On an ongoing basis, management reviews its estimates, including those related to determination of properties
and equipment, proved reserves, goodwill, asset retirement obligations, litigation, environmental liabilities, pension liabilities and costs,
income taxes and fair values. Changes in facts and circumstances or discovery of new information may result in revised estimates and actual
results may differ from these estimates. Management considers the following to be its most critical accounting policies and estimates that
involve judgment and discusses the selection and development of these policies and estimates with the Company’s Audit Committee.
Oil and Gas Activities

Anadarko uses the successful efforts method to account for its oil and gas activities. Under this method, acquisition costs and the costs
associated with drilling exploratory well costs are capitalized pending the determination of proved oil and gas reserves. Geological and
geophysical costs and other costs of carrying properties such as delay rentals are expensed as incurred.
Acquisition Costs
Acquisition costs of unproved properties are assessed for impairment during the holding period and transferred to proved oil and gas
properties to the extent associated with successful exploration activities. Significant undeveloped leases are assessed periodically for
impairment individually, based on the Company’s current exploration plans, and a valuation allowance is provided if impairment is indicated.
For unproved oil and gas properties with individually insignificant lease acquisition costs, costs are amortized on a group basis over the
average lease terms at rates that provide for full amortization of unsuccessful leases upon expiration. Costs of expired or abandoned leases are
charged against the valuation allowance, while costs of productive leases are transferred to proved oil and gas properties. Amortization of
individually insignificant leases and impairment of unsuccessful leases are included in exploration expense.
Significant undeveloped leasehold costs are assessed for impairment at a lease level or resource play (for example, Greater Natural Buttes
area in the Rocky Mountain region), while leasehold acquisition costs associated with prospective areas that have had limited or no previous
exploratory drilling are generally assessed for impairment by major prospect area.
A majority of the Company’s unproved leasehold costs are associated with properties acquired in the Kerr-McGee and Western
acquisitions in 2006 and to which proved developed producing reserves are also attributed. Generally, economic recovery of unproved
reserves in such areas is not yet supported by actual production or conclusive formation tests, but may be confirmed by the Company’s
continuing exploitation program. Ultimate recovery of potentially recoverable reserves in areas with established production generally has
greater likelihood than in areas with limited or no prior drilling activity.
Another portion of the Company’s unproved leasehold costs are associated with the Land Grant acreage, where the Company owns
mineral interests in perpetuity and plans to continue to explore and evaluate the acreage.
A change in the Company’s expected future plans for exploration and development could cause a write-down in the Company’s
unproved property.
Exploratory Costs
Under the successful efforts method of accounting, exploratory costs associated with a discovery well are initially capitalized, or
suspended, pending determination of whether proved reserves can be attributed to the area as a result of drilling. At the end of each quarter,
management reviews the status of all suspended exploratory drilling costs in light of ongoing exploration activities—in particular, whether the
Company is making sufficient progress in its ongoing exploration and appraisal efforts or, in the case of discoveries requiring government
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sanctioning, whether development negotiations are under way and proceeding as planned. If management determines that future appraisal
drilling or development activities are unlikely to occur, associated suspended exploratory drilling costs are expensed. Therefore, at any point in
time, the Company may have capitalized costs on its consolidated balance sheet associated with exploratory wells that may be charged to
exploration expense in a future period. At December 31, 2008, suspended exploratory drilling costs were $279 million compared to $308 million
at December 31, 2007.
Proved Reserves
Anadarko estimates proved oil and gas reserves as defined by the SEC and the FASB. This definition includes crude oil, natural gas, and
NGLs which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of
changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.
The Company’s estimates of proved reserves are made using available geological and reservoir data as well as production performance
data. These estimates are reviewed annually by internal reservoir engineers and revised, either upward or downward, as warranted by
additional data. Revisions are necessary due to changes in, among other things, reservoir performance, prices, economic conditions and
governmental restrictions, as well as changes in the expected recovery rates associated with infill drilling. Decreases in prices, for example, may
cause a reduction in some proved reserves due to reaching economic limits earlier. A material adverse change in the estimated volumes of
proved reserves could have a negative impact on DD&A expense and impairment expense.
In December 2008, the SEC released the final rule for Modernization. The Modernization disclosure requirements will permit reporting of
oil and gas reserves using an average price based upon the prior 12-month period rather than year-end prices and the use of new technologies
to determine proved reserves, if those technologies have been demonstrated to result in reliable conclusions about reserves volumes.
Companies will also be allowed to disclose probable and possible reserves in SEC filed documents. In addition, companies will be required to
report the independence and qualifications of its reserves preparer or auditor and file reports when a third party is relied upon to prepare
reserves estimates or conduct a reserves audit. The Modernization disclosure requirements become effective for Anadarko’s Annual Report
on Form 10-K for the year ended December 31, 2009. The SEC is coordinating with the FASB to obtain the revisions necessary to provide
consistency with the Modernization. In the event that consistency is not achieved in time for companies to comply with the Modernization,
the SEC will consider delaying the compliance date. A significant change as a result of the Modernization rule relates to the calculation of
reserves. Currently, reserves are calculated on a single-day year-end price. Under the Modernization rule, reserves will be calculated on an
average price which will reduce the volatility (volatility as demonstrated in 2008) of the reserve calculation.
Fair Value
The Company estimates fair value for the measurement of derivatives, long-lived assets during certain impairment tests, reporting units
for goodwill impairment testing, certain exchanges, guarantees, and the initial measurement of an ARO. When the Company is required to
measure fair value, and there is not a market observable price for the asset or liability, or a market observable price for a similar asset or liability,
the Company generally utilizes an income valuation approach. This approach utilizes management’s best assumptions regarding expectations
of projected cash flows, and discounts the expected cash flows using a commensurate risk adjusted discount rate. Such evaluations involve a
significant amount of judgment since the results are based on expected future events or conditions, such as sales prices; estimates of future
oil and gas production or throughput; development and operating costs and the timing thereof; economic and regulatory climates and other
factors. The Company’s estimates of future net cash flows are inherently imprecise because they reflect management’s expectation of future
conditions that are often outside of management’s control. However, assumptions used reflect a market participant’s view of long-term prices,
costs and other factors, and are consistent with assumptions used in the Company’s business plans and investment decisions.
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Business Combinations
Accounting for the acquisition of a business requires the allocation of the purchase price to the various assets and liabilities of the
acquired business and recording deferred taxes for any differences between the allocated values and tax basis of assets and liabilities. Any
excess of the purchase price over the amounts assigned to assets and liabilities is recorded as goodwill.
Purchase Price Allocation

The purchase price allocation is accomplished by recording the asset or liability at its estimated fair value. Estimated deferred taxes are
based on available information concerning the tax basis of the acquired company’s assets and liabilities and carryforwards at the merger date,
although such estimates may change in the future as additional information becomes known. The amount of goodwill recorded in any
particular business combination can vary significantly depending upon the values attributed to assets acquired and liabilities assumed relative
to the total acquisition cost.
Goodwill
At December 31, 2008, the Company had $5.3 billion of goodwill recorded related to past business combinations. This goodwill is not
amortized, but is required to be assessed for impairment annually, or more often as facts and circumstances warrant. The first step of that
process is to compare the fair value of the reporting unit to which goodwill has been assigned to the carrying amount of the associated net
assets and goodwill. The reporting units used to evaluate and measure goodwill for impairment are determined from the manner in which the
business is managed. A reporting unit is an operating segment or a component that is one level below an operating segment. Anadarko has
allocated goodwill to three reporting units. These reporting units are oil and gas exploration and production, gathering and processing, and
transportation. Goodwill is tested annually on January 1. The Company completed its January 1, 2008 annual goodwill impairment tests with no
impairment indicated. As a result of general economic conditions, declines in commodity prices, and declines in its market capitalization
compared to the book value of its stockholders’ equity during the fourth quarter of 2008, the Company determined an interim impairment test
as of December 31, 2008 was appropriate. The results of this interim goodwill impairment test also resulted in no impairment indicated.
Anadarko considered its conclusions in light of its year-end market capitalization being approximately 6% below the book value of its
stockholders’ equity, and concluded the assessment that no impairment was appropriate when considering that the market value for one share
of Anadarko common stock does not consider any premium that might be paid by a buyer who would obtain control of Anadarko’s entire oil
and gas, gathering and processing, or transportation reporting units. Although Anadarko cannot predict when or if goodwill will be impaired
in the future, impairment charges may occur if the Company is unable to replace the value of its depleting asset base or if other adverse events
(for example, lower sustained oil and gas prices) reduce the fair value of the associated reporting unit.
Because quoted market prices for the Company’s reporting units are not available, management must apply judgment in determining the
estimated fair value of these reporting units for purposes of performing the goodwill impairment test. Management uses all available
information to make these fair value estimates, including the present values of expected future cash flows using discount rates commensurate
with the risks involved in the assets and observed for the oil and gas exploration and production reporting unit and market multiples of
EBITDAX for the gathering and processing and transportation reporting units. In estimating fair value of its oil and gas reporting unit, the
Company assumed production profiles utilized in its year-end estimation of reserves that are disclosed in the Company’s supplemental oil and
gas disclosures, market prices considering the forward price curve for oil and gas, adjusted for location and quality differentials that the
Company currently receives, as well as capital and operating costs consistent with year-end pricing, adjusted for management’s view that
such costs should decline in the near term to realign with lower commodity prices, and discount rates that management believes a market
participant would utilize to consider the risks inherent in Anadarko’s operations. For the Company’s midstream reporting units, the Company
estimated fair value based on an estimated multiple of projected 2009 earnings before interest, taxes, depreciation and amortization (EBITDA).
The Company
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considered the relatively few transactions in the market, as well as trading multiples for peers to determine an appropriate multiple to apply
against the Company’s projected EBITDA for its gathering and processing and transportation reporting units. A lower fair value estimate in
the future for any of these reporting units could result in impairment. Examples of factors that could cause a lower fair value estimate could be
sustained declines in prices, increases in costs, and changes in discount rate assumptions due to market conditions.
Impairment of Assets
A long-lived asset other than unproved oil and gas property is evaluated for potential impairment whenever events or changes in
circumstances indicate that its carrying amount may be greater than its future net cash flows. Impairment loss, if any, is measured as the excess
of its carrying amount over the asset’s estimated fair value. The expected future cash flows used for impairment reviews and related fair value
calculations are based on judgmental assessments of future production volumes, prices and costs, considering all available information at the
date of the impairment review.
Derivative Instruments
All derivative instruments, other than those that meet specific exclusions, are recorded at fair value. If market quotes are not available to
estimate fair value, management’s best estimate of fair value is based on the quoted market price of derivatives with similar characteristics or
utilizing industry standard valuation techniques.
The Company’s derivative instruments are either exchange traded or transacted in an over-the-counter market. Valuation is determined
by reference to readily available public data. Option fair values are measured using the Black-Scholes-Merton option pricing model and
verified by comparing a sample to market quotes for similar options if available. Unrealized gains or losses on derivatives are recorded within
Anadarko’s current earnings.
Benefit Plan Obligations

The Company has non-contributory defined benefit pension plans, including both qualified and supplemental plans, and a foreign
contributory defined benefit pension plan. The Company also provides certain health care and life insurance benefits for retired employees.
Determination of the projected benefit obligations for the Company’s defined benefit pension and postretirement plans is important to the
recorded amounts for such obligations on the balance sheet and to the amount of benefit expense in the income statement. This also impacts
the Company’s decisions for amounts contributed into the plans.
Accounting for pension and other postretirement benefit obligations involves numerous assumptions, the most significant of which
relate to discount rate for measuring the present value of future plan obligations; expected long-term rates of return on plan assets; rate of
future increases in compensation levels; and health care cost projections. Anadarko develops demographics and utilizes the work of third-
party actuaries to assist in the measurement of these obligations.
Discount rate
The discount rate assumption used by the Company is meant to reflect the interest rate at which the pension and other postretirement
obligations could effectively be settled on the measurement date. The Company currently uses a yield curve analysis, for a majority of the
plans, to support the discount rate assumption. This analysis involves the creation of a hypothetical Aa spot yield curve represented by a
series of high-quality, non-callable, marketable bonds, then discounts the projected cash flows from each plan at interest rates on the created
curve specifically applicable to the timing of each respective cash flow. The present values of the cash flows are then accumulated, and a
weighted-average discount rate is calculated by imputing the single discount rate that equates to the total present value of the cash flows. The
consolidated discount rate assumption is determined by evaluation of the weighted-average discount rates determined for each of the
Company’s significant pension and postretirement plans. The weighted-average discount rate assumption used by the Company as of
December 31, 2008 was 6.0% for pension plans and other postretirement plans.
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Expected long-term rate of return

The expected long-term rate of return on assets assumption was determined using the year-end 2008 pension investment balances by
category and projected target asset allocations for 2009. The expected return for each of these categories was determined by using capital
market projections, with consideration of actual five-year performance statistics for investments in place. The weighted-average expected long-
term rate of return on plan assets assumption used by the Company as of December 31, 2008 was 7.75%.
Rate of compensation increases

The Company determines this assumption based on its long-term plans for compensation increases specific to employee groups covered
and expected economic conditions. The assumed rate of salary increases includes the effects of merit increases, promotions and general
inflation. The weighted-average rate of increase in long-term compensation levels assumption used by the Company as of December 31, 2008
was 5.0%.
Health care cost trend rate

The health care cost trend assumptions are developed based on historical cost data, the near-term outlook and an assessment of likely
long-term trends. A 9.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2009, decreasing
gradually to 5.0% in 2017 and later years.
Environmental Obligations and Other Contingencies

Management makes judgments and estimates in accordance with applicable accounting rules when it establishes reserves for
environmental remediation, litigation and other contingent matters. Provisions for such matters are charged to expense when it is probable that
a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities are based on a variety
of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation
technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly change the Company’s
estimate of environmental remediation costs, such as changes in laws and regulations, or changes in their interpretation or administration,
revisions to the remedial design, unanticipated construction problems, identification of additional areas or volumes of contaminated soil and
groundwater, and changes in costs of labor, equipment and technology. Consequently, it is not possible for management to reliably estimate
the amount and timing of all future expenditures related to environmental or other contingent matters and actual costs may vary significantly
from the Company’s estimates. The Company’s in-house legal counsel and environmental personnel regularly assess these contingent
liabilities and, in certain circumstances, outside legal counsel or consultants are utilized.
Income Taxes
The amount of income taxes recorded by the Company requires the interpretation of complex rules and regulations of various taxing
jurisdictions throughout the world. The Company has recognized deferred tax assets and liabilities for temporary differences, operating losses
and tax credit carryforwards. The Company routinely assesses the realizability of its deferred tax assets and reduces such assets by a
valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company routinely
assesses potential uncertain tax positions and, if required, establishes accruals for such amounts. The accruals for deferred tax assets and
liabilities are subject to a significant amount of judgment by Company management and are reviewed and adjusted routinely based on changes
in facts and circumstances. Although Company management believes its tax accruals are adequate, material changes in these accruals may
occur in the future, based on the progress of ongoing tax audits, changes in legislation and resolution of pending tax matters.
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Recent Accounting Developments

In June 2008, the FASB issued FASB Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP EITF No. 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior to vesting and are therefore required to be included in the
earnings allocation in calculating earnings per share (EPS) under the two-class method described in SFAS No. 128, “Earnings per Share.” FSP
EITF No. 03-6-1 requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividend or dividend
equivalents as a separate class of securities in calculating EPS. FSP EITF No. 03-6-1 is effective for fiscal years beginning after
December 15, 2008; early adoption is not permitted. The Company adopted FSP EITF No. 03-6-1 effective January 1, 2009. FSP EITF No. 03-6-1
will not affect Anadarko’s presentation of EPS.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (SFAS No. 161).
SFAS No. 161 does not change the accounting policy for derivatives, but requires enhanced disclosures about how and why an entity uses
derivative instruments, how derivative instruments and related hedged items (if any) are accounted for, and how they affect the Company’s
financial position, financial performance, and cash flows. SFAS No. 161 is effective for Anadarko for annual and interim periods beginning with
the first quarter of 2009. Anadarko did not elect early adoption. SFAS No. 161 is a disclosure requirement that does not affect Anadarko’s
consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—An Amendment of
ARB No. 51”. SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as a
component of consolidated equity. This is a change from the current practice to present noncontrolling interests in liabilities or between
liabilities and stockholders’ equity. Similarly, SFAS No. 160 requires consolidated net income and comprehensive income to be reported at
amounts that include the amounts attributable to both the parent and the noncontrolling interests. Anadarko will be required to adopt
accounting provisions of SFAS No. 160 prospectively with respect to transactions involving noncontrolling financial interests that occur on
or after January 1, 2009. Presentation and disclosure requirements of SFAS No. 160 will also be applied effective January 1, 2009, but with
respect to all periods presented. After adopting SFAS No. 160 in 2009, the Company will apply provisions of this standard to noncontrolling
interests created or acquired in future periods. Upon adoption, the Company will reclassify its minority interests to stockholders’ equity.
For additional information on recently issued accounting standards not yet adopted, see Note 1—Summary of Significant Accounting
Policies of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company’s primary market risks are fluctuations in energy prices and interest rates. These fluctuations can affect revenues and cash
flow from operating, investing and financing activities. The Company’s risk management policies provide for the use of derivative instruments
to manage these risks. The types of derivative instruments utilized by the Company include futures, swaps, options and fixed price physical
delivery contracts. The volume of derivative instruments utilized by the Company is governed by the risk management policy and can vary
from year to year. Both exchange and over-the-counter traded derivative instruments may be subject to margin deposit requirements. Given the
Company’s price risk management position and price volatility, the Company may be required from time to time to deposit cash or provide
letters of credit with its counterparties in order to satisfy these margin requirements. For additional information see Liquidity and Capital
Resources—Margin Deposits under Part II, Item 7 of this Form 10-K.
For information regarding the Company’s accounting policies and additional information related to the Company’s derivative and
financial instruments, see Note 1—Summary of Significant Accounting Policies, Note 10—Debt and Interest Expense and Note
8—Derivative Instruments of the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
Energy Price Risk The Company’s most significant market risk is the pricing for natural gas, crude oil and NGLs. Management expects energy
prices to remain volatile and unpredictable. If energy prices decline significantly, revenues and cash flow would significantly decline. In
addition, a non-cash write-down of the Company’s oil and gas properties could be required under successful efforts accounting rules if future
oil and gas commodity prices sustained significant decline. Below is a sensitivity analysis of the Company’s commodity price related
derivative instruments.
Derivative Instruments Held for Non-Trading Purposes The Company had derivative instruments in place to reduce the price risk associated
with future equity production of 322 Bcf of natural gas and 34 MMBbls of crude oil as of December 31, 2008. As of December 31, 2008, the
Company had a net unrealized gain of $619 million on these derivative instruments. Utilizing the actual derivative contractual volumes, a 10%
increase in underlying commodity prices would reduce the fair value of these instruments by approximately $149 million, while a 10% decrease
in underlying commodity prices would increase the fair value of these instruments by approximately $111 million. However, a loss or gain
would be substantially offset by an increase or decrease, respectively, in the value of that portion of the Company’s production covered by
the derivative instruments.
Derivative Instruments Held for Trading Purposes As of December 31, 2008, the Company had a net unrealized gain of $48 million (gains of
$78 million and losses of $30 million) on derivative financial instruments entered into for trading purposes. Utilizing the actual derivative
contractual volumes, a 10% increase or decrease in underlying commodity prices would result in a loss or gain, respectively, on these
derivative instruments of $5 million.
For additional information regarding the Company’s marketing and trading portfolio, see Marketing Strategies under Item 7 of this Form
10-K.
Interest Rate Risk As of December 31, 2008, Anadarko had outstanding $3.1 billion of variable-rate debt (including the midstream subsidiary
note payable to a related party) and $9.2 billion of fixed-rate debt. A 10% increase in LIBOR interest rates would increase gross interest
expense approximately $9 million per year.
In January 2008, Anadarko entered into forward-looking 18-month interest rate swaps effective March 2008 with an aggregate notional
principal amount of $1.0 billion whereby the Company will pay a weighted-average fixed interest rate of 2.74% and receive a floating interest
rate indexed to the three-month LIBOR rate.
In anticipation of the refinancing of existing debt obligations, Anadarko entered into swaps to fix interest rates and in doing so mitigated
a portion of the risk it had to unfavorable interest rate changes prior to the future issuance of debt. In December 2008, Anadarko entered into
three-year forward-looking 10-year swap agreements with a combined notional principal amount of $400 million, a three-year forward-looking
30-year swap
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agreement with a notional principal amount of $100 million, and four-year forward-looking 30-year swap agreements with a combined notional
principal amount of $250 million. Under each of these agreements, the Company will pay a fixed interest rate and receive a floating interest rate
indexed to the three-month LIBOR rate.
In January 2009, Anadarko entered into three-year forward-looking 10-year swap agreements with a combined notional principal amount
of $350 million, three-year forward-looking 30-year swap agreements with a combined notional principal amount of $1.15 billion, four-year
forward-looking 10-year swap agreements with a combined notional principal amount of $250 million, and four-year forward-looking 30-year
swap agreements with a combined notional principal amount of $500 million. Under each of these agreements, the Company will pay a fixed
interest rate and receive a floating interest rate indexed to the three-month LIBOR rate.
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Item 8. Financial Statements and Supplementary Data

INDEX
CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Management 69
Management’s Assessment of Internal Control Over Financial Reporting 69
Reports of Independent Registered Public Accounting Firm 70
Statements of Income, Three Years Ended December 31, 2008 72
Balance Sheets, December 31, 2008 and 2007 73
Statements of Stockholders’ Equity, Three Years Ended December 31, 2008 74
Statements of Comprehensive Income, Three Years Ended December 31, 2008 75
Statements of Cash Flows, Three Years Ended December 31, 2008 76
Notes to Consolidated Financial Statements 77
Supplemental Quarterly Information 125
Supplemental Information on Oil and Gas Exploration and Production Activities 126
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REPORT OF MANAGEMENT
Management prepared, and is responsible for, the consolidated financial statements and the other information appearing in this annual
report. The consolidated financial statements present fairly the Company’s financial position, results of operations and cash flows in
conformity with accounting principles generally accepted in the United States. In preparing its consolidated financial statements, the Company
includes amounts that are based on estimates and judgments that Management believes are reasonable under the circumstances. The
Company’s financial statements have been audited by KPMG LLP, an independent registered public accounting firm appointed by the Audit
Committee of the Board of Directors. Management has made available to KPMG LLP all of the Company’s financial records and related data, as
well as the minutes of the stockholders’ and Directors’ meetings.
MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Anadarko’s internal
control system was designed to provide reasonable assurance to the Company’s Management and Directors regarding the preparation and fair
presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. This
assessment was based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our assessment, we believe that as of December 31, 2008 the Company’s
internal control over financial reporting is effective based on those criteria.
/s/ JAMES T. HACKETT

James T. Hackett
Chairman, President and Chief Executive Officer
/s/ R. A. WALKER
R. A. Walker
Senior Vice President, Finance and
Chief Financial Officer
February 24, 2009
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders

Anadarko Petroleum Corporation:
We have audited Anadarko Petroleum Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2008, based
on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Anadarko Petroleum Corporation’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Anadarko Petroleum Corporation and subsidiaries maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of Anadarko Petroleum Corporation and subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements of income, stockholders’ equity, comprehensive income, and cash flows for each of the years in the three-year period ended
December 31, 2008, and our report dated February 24, 2009 expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Houston, Texas
February 24, 2009
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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders

We have audited the accompanying consolidated balance sheets of Anadarko Petroleum Corporation and subsidiaries as of December 31,
2008 and 2007, and the related consolidated statements of income, stockholders’ equity, comprehensive income, and cash flows for each of the
years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Anadarko
Petroleum Corporation and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for uncertainty in income
taxes in 2007.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Anadarko
Petroleum Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and
our report dated February 24, 2009 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial
reporting.
/s/ KPMG LLP
Houston, Texas
February 24, 2009
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CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31

2008 2007 2006
millions except per share amounts
Revenues and Other
Gas sales $ 6,254 $ 4,119 $ 4,186
Oil and condensate sales 6,502 4,807 4,618
Natural gas liquids sales 802 719 594
Gathering, processing and marketing sales 1,082 1,487 718
Gains (losses) on divestitures and other, net 1,083 4,760 114
Total 15,723 15,892 10,230
Costs and Expenses
Oil and gas operating 1,104 1,101 822
Oil and gas transportation and other 553 453 341
Exploration 1,369 905 737
Gathering, processing and marketing 800 1,025 553
General and administrative 866 936 768
Depreciation, depletion and amortization 3,194 2,840 1,752
Other taxes 1,452 1,234 549
Impairments 223 51 327
Total 9,561 8,545 5,849
Operating Income 6,162 7,347 4,381
Other (Income) Expense
Interest expense 742 1,092 650
Other (income) expense, net 51 (74) (6)
Minority interests 23 — —
Total 816 1,018 644
Income from Continuing Operations Before Income Taxes 5,346 6,329 3,737
Income Tax Expense 2,148 2,559 1,263
Income from Continuing Operations 3,198 3,770 2,474
Income from Discontinued Operations, net of taxes 63 11 2,275
Net Income $ 3,261 $ 3,781 $ 4,749
Preferred Stock Dividends 1 3 3
Net Income Available to Common Stockholders $ 3,260 $ 3,778 $ 4,746
Per Common Share
Income from continuing operations — basic $ 6.87 $ 8.09 $ 5.37
Income from continuing operations — diluted $ 6.84 $ 8.05 $ 5.33
Income from discontinued operations, net of taxes — basic $ 0.13 $ 0.02 $ 4.94
Income from discontinued operations, net of taxes — diluted $ 0.13 $ 0.02 $ 4.91
Net income available to common stockholders — basic $ 7.01 $ 8.12 $ 10.31
Net income available to common stockholders — diluted $ 6.97 $ 8.08 $ 10.24
Average Number of Common Shares Outstanding — Basic 465 465 460
Average Number of Common Shares Outstanding — Diluted 468 468 464
Dividends (per Common Share) $ 0.36 $ 0.36 $ 0.36
See accompanying notes to consolidated financial statements.
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CONSOLIDATED BALANCE SHEETS
De ce m be r 31
2008 2007
m illions
AS S ETS
C u rre n t Asse ts
Cash and cash equivalents $ 2,360 $ 1,268
Accounts receivable, net of allowance:
Customers 791 1,465
Others 896 1,111
Other current assets 1,328 642
T otal 5,375 4,486
Prope rtie s an d Equ ipm e n t
Cost 47,073 44,205
Less accumulated depreciation, depletion and amortization 10,026 6,754
Net properties and equipment 37,047 37,451
O the r Asse ts 1,088 1,030
Goodwill an d O the r Intangible Asse ts 5,413 5,166
Lon g-te rm Asse ts He ld for Sale — 318
Total Asse ts $48,923 $48,451
LIABILITIES AND S TO C KHO LDERS ’ EQ UITY
C u rre n t Liabilitie s
Accounts payable $ 3,166 $ 2,778
Accrued expenses 898 1,060
Current debt 1,472 1,396
T otal 5,536 5,234
Lon g-te rm De bt 9,128 11,151
Midstre am S u bsidiary Note Payable to a Re late d Party 1,739 2,200
O the r Lon g-te rm Liabilitie s
Deferred income taxes 9,974 10,214
Other 3,390 3,282
Long-term liabilities associated with assets held for sale — 6
T otal 13,364 13,502
Min ority In te re sts 361 —
S tockh olde rs’ Equ ity
P referred stock, par value $1.00 per share
(2.0 million shares authorized, zero and 0.05 million shares issued as of
December 31, 2008 and 2007, respectively) — 45
Common stock, par value $0.10 per share
(1.0 billion shares authorized, 471.6 million and 469.1 million shares
issued as of December 31, 2008 and 2007, respectively) 47 47
P aid-in capital 5,696 5,511
Retained earnings 14,179 11,089
T reasury stock (11.7 million and 1.1 million shares as of
December 31, 2008 and 2007, respectively) (686) (55)
Accumulated other comprehensive income (loss):
Gains (losses) on derivative instruments (118) (132)
Foreign currency translation adjustments (1) (1)
P ension and other postretirement plans (322) (140)
T otal (441) (273)
T otal 18,795 16,364
C om m itm e n ts and C on tin ge n cie s (Note 13 an d Note 14)
Total Liabilitie s an d S tockh olde rs’ Equ ity $48,923 $48,451
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Accumulated
Other Total
Preferred Common Paid-in Retained Treasury Comprehensive Stockholders’
Stock Stock Capital Earnings Stock Income (Loss) Equity
millions
Balance at January 1, 2006 $ 89 $ 27 $ 5,874 $ 4,552 $ (2,423) $ 530 $ 8,649
Net income — — — 4,749 — — 4,749
Preferred stock
repurchased and retired (43) — — — — — (43)
Common stock issued — 1 224 — — — 225
Two-for-one stock split — 23 (23) — — — —
Retirement of treasury
stock — (4) (820) (1,722) 2,545 — (1)
Dividends — preferred — — — (3) — — (3)
Dividends — common — — — (167) — — (167)
Repurchase of common
stock — — — — (142) — (142)
Gains (losses) on
derivative instruments — — — — — (132) (132)
Foreign currency
translation adjustments — — — — — (552) (552)
Pensions and other
postretirement liability
adjustments — — — — — 7 7
Adoption of SFAS 158 — — — — — (187) (187)
Balance at December 31,
2006 46 47 5,255 7,409 (20) (334) 12,403
Net income — — — 3,781 — — 3,781
Preferred stock
Common stock issued — — 256 — — — 256
Adoption of FIN 48 — — — 72 — — 72
stock — — — — (35) — (35)
Gains (losses) on
derivative instruments — — — — — 5 5
Foreign currency
translation adjustments — — — — — (1) (1)
Pensions and other
adjustments — — — — — 57 57
2007 45 47 5,511 11,089 (55) (273) 16,364
Net income — — — 3,261 — — 3,261
Preferred stock
Common stock issued — — 189 — — — 189
Other equity transactions — — (4) — — — (4)
stock — — — — (631) — (631)
Gains (losses) on
derivative instruments — — — — — 14 14
Pensions and other
adjustments — — — — — (182) (182)
2008 $ — $ 47 $5,696 $ 14,179 $ (686) $ (441) $ 18,795
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2008 2007 2006
millions
Net Income Available to Common Stockholders $ 3,260 $ 3,778 $ 4,746
Add: Preferred stock dividends 1 3 3
Net Income 3,261 3,781 4,749
Other Comprehensive Income (Loss), net of taxes
Gains (losses) on derivative instruments:
Gains (losses) during the period (1) — — (135)
Reclassification adjustment for (gain) loss included in net income (2) 14 5 3
Total gains (losses) on derivative instruments 14 5 (132)
Foreign currency translation adjustments:
Unrealized foreign currency gains (losses) (3) — (1) 67
Reclassification of foreign currency translation to (gain) loss
on the disposition of Canadian operations (4) — — (619)
Total foreign currency translation adjustments — (1) (552)
Pension and other postretirement plans adjustments:
Minimum pension liability adjustments (5) — — 7
Net gain (loss) incurred during period (6) (187) 42 —
Amortization of net (gain) loss included in net periodic pension cost (7) 9 11 —
Prior service credit (cost) incurred during period (8) (4) 4 —
Total pension and other postretirement plans adjustments (182) 57 7
Total (168) 61 (677)
Comprehensive Income $ 3,093 $ 3,842 $ 4,072
(1) net of income tax benefit (expense) of: $ — $ — $ 77
(2) net of income tax benefit (expense) of: (8) (3) (2)
(3) net of income tax benefit (expense) of: — — (10)
(4) net of income tax benefit (expense) of: — — 103
(5) net of income tax benefit (expense) of: — — (3)
(6) net of income tax benefit (expense) of: 107 (23) —
(7) net of income tax benefit (expense) of: (5) (7) —
(8) net of income tax benefit (expense) of: 2 (2) —
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CONSOLIDATED STATEMENTS OF CASH FLOWS

2008 2007 2006
m illions
C ash Flow from O pe ratin g Activitie s
Net income $ 3,261 $ 3,781 $ 4,749
Less income from discontinued operations, net of taxes 63 11 2,275
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes (22) (1,057) 328
Dry hole expense and impairments of unproved properties 1,005 632 460
Minority interests 23 — —
(Gains) losses on divestitures, net (993) (4,660) (26)
Unrealized (gains) losses on derivatives (919) 1,048 (837)
Other noncash items 124 172 68
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 803 391 (398)
Increase (decrease) in accounts payable and accrued expenses 158 (1,521) 647
Other items-net (347) 1,100 (124)
Cash provided by (used in) operating activities — continuing operations 6,447 2,766 4,671
Cash provided by (used in) operating activities — discontinued operations (5) 134 (178)
Net cash provided by (used in) operating activities 6,442 2,900 4,493
C ash Flow from Inve stin g Activitie s
Acquisitions, net of cash acquired — (7) (21,087)
Additions to properties and equipment and dry hole costs (4,801) (4,246) (4,206)
Divestitures of properties and equipment and other assets 2,455 8,260 1,086
Investment in T rinity Associates LLC — (100) —
Other-net (182) (63) —
Cash provided by (used in) investing activities — continuing operations (2,528) 3,844 (24,207)
Cash provided by (used in) investing activities — discontinued operations — (66) 3,652
Net cash provided by (used in) investing activities (2,528) 3,778 (20,555)
C ash Flow from Fin an cin g Activitie s
Borrowings, net of issuance costs — (40) 28,603
Borrowings from affiliates, net of issuance costs 1 2,848 —
Issuance of midstream subsidiary note payable, net of issuance costs — 2,176 —
Repayments of debt (1,960) (10,475) (12,482)
Repayments on midstream subsidiary note payable (461) — —
Increase (decrease) in accounts payable, banks 89 (29) 61
Dividends paid (171) (173) (170)
Settlement of derivatives with a financing element 6 (306) (122)
Repurchase of common stock (631) (35) (142)
Repurchase and retirement of preferred stock (45) (1) (43)
Issuance of common stock, including tax benefit on stock option exercises 25 114 130
Sale of subsidiary interests 343 — —
Distributions to minority interests shareholders (16) — —
Other financing activities (2) — —
Cash provided by (used in) financing activities — continuing operations (2,822) (5,921) 15,835
Cash provided by (used in) financing activities — discontinued operations — — (12)
Net cash provided by (used in) financing activities (2,822) (5,921) 15,823
Effe ct of Exch an ge Rate C h an ge s on C ash — discon tin u e d ope ration s — — 11
Ne t In cre ase (De cre ase ) in C ash an d C ash Equ ivale n ts 1,092 757 (228)
C ash an d C ash Equ ivale n ts at Be ginn ing of Pe riod 1,268 511 739
C ash an d C ash Equ ivale n ts at En d of Pe riod $ 2,360 $ 1,268 $ 511
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2008, 2007 and 2006
1. Summary of Significant Accounting Policies
General Anadarko Petroleum Corporation is engaged in the exploration, development, production, gathering, processing and marketing of
natural gas, crude oil, condensate and natural gas liquids (NGLs). The Company also participates in the hard minerals business through its
ownership interests in non-operated joint ventures and royalty arrangements. In August 2006, Anadarko completed the acquisitions of Kerr-
McGee Corporation (Kerr-McGee) and Western Gas Resources, Inc. (Western). See Note 2. The terms “Anadarko” and “Company” refer to
Anadarko Petroleum Corporation and its consolidated subsidiaries.
Principles of Consolidation The consolidated financial statements have been prepared in conformity with accounting principles generally
accepted in the United States. The consolidated financial statements include the accounts of Anadarko and entities in which it holds a
controlling financial interest. Undivided interests in oil and gas joint ventures are consolidated on a proportionate basis. All significant
intercompany transactions have been eliminated. Investments in non-controlled entities over which Anadarko exercises significant influence
are accounted for using the equity method. Other investments, excluding marketable securities, are carried at cost. Certain amounts for prior
periods have been reclassified to conform to the current presentation.
Use of Estimates In preparing financial statements in accordance with accounting principles generally accepted in the United States,
management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial
statements and affect the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, management
reviews its estimates, including those related to determination of the carrying value of properties and equipment, proved reserves, goodwill,
intangible assets, asset retirement obligations, litigation, environmental liabilities, pension liabilities and costs, income taxes, and fair values.
Changes in facts and circumstances or discovery of new information may result in revised estimates and actual results may differ from these
estimates.
Fair Value Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements,” defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
(exit price). SFAS No. 157 characterizes inputs used in determining fair value according to a hierarchy that prioritizes inputs based upon the
degree to which they are observable. The three levels of the fair value hierarchy are as follows:
Level 1 - inputs represent quoted prices in active markets for identical assets or liabilities (for example,
exchange-traded commodity derivatives).
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly (for example, quoted market prices for similar assets or liabilities in active markets or quoted market prices for identical
assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or
liability, or market-corroborated inputs).
Level 3 - inputs that are not observable from objective sources, such as the Company’s internally developed assumptions about
market participant assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in the
Company’s internally developed present value of future cash flows model that underlies the fair value measurement).
In determining fair value, the Company utilizes observable market data when available, or models that utilize observable market data. In
addition to market information, the Company incorporates transaction-specific details that, in management’s judgment, market participants
would take into account in measuring fair value.
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1. Summary of Significant Accounting Policies (Continued)
In forming fair value estimates, the Company utilizes the most observable inputs available for the valuation technique employed. If a fair
value measurement reflects inputs at multiple levels within the hierarchy, the fair value measurement is characterized based upon the lowest
level of input that is significant to the fair value measurement. For Anadarko, recurring fair value measurements are performed for interest rate
derivatives, commodity derivatives and investments in trading securities.
The carrying amount of cash and cash equivalents, accounts receivable and accounts payable reported on the balance sheet
approximates fair value.
Changes in Accounting Principles The Company adopted SFAS No. 157 as of January 1, 2008. SFAS No. 157 does not require any
additional fair value measurements. Rather, the pronouncement defines fair value, establishes a framework for measuring fair value under
existing accounting pronouncements that require fair value measurements, and expands disclosures about fair value measurements. The
Company elected to implement this Statement with the one-year deferral permitted by Financial Accounting Standards Board (FASB) Staff
Position (FSP) No. FAS 157-2 for nonfinancial assets and nonfinancial liabilities, except those nonfinancial items recognized or disclosed at fair
value on a recurring basis (at least annually). The one-year deferral provision applies to nonfinancial assets and liabilities initially measured at
fair value in connection with business combinations and exchanges, impaired long-lived assets (asset groups), intangible assets and goodwill,
and initial recognition of asset retirement obligations and restructuring costs for which Anadarko employs fair value measurement. The
Company does not expect any significant impact on its consolidated financial statements when the Company implements SFAS No. 157 for
these assets and liabilities. See Note 8.
As of January 1, 2008, Anadarko adopted FSP FASB Interpretation No. (FIN) 39-1, “Amendment of FASB Interpretation No. 39,” which
amends FIN No. 39, “Offsetting of Amounts Related to Certain Contracts.” The FSP permits netting fair values of derivative assets and
liabilities for financial reporting purposes, if such assets and liabilities are with the same counterparty and subject to a master netting
arrangement. The Company has elected to employ net presentation of derivative assets and liabilities when FSP No. FIN 39-1 conditions are
met. This election is consistent with the Company’s historical practice and, therefore, did not affect prior periods presented. However, the FSP
also requires that the net presentation of derivative assets and liabilities include amounts attributable to the fair value of the right to reclaim
collateral assets held by counterparties or the obligation to return cash collateral received from counterparties. Netting collateral assets and
liabilities against corresponding derivative balances represents a change in accounting policy for Anadarko, and has been applied in all
periods presented. As a result, collateral assets of $30 million at December 31, 2007 were reclassified and are presented as a reduction of
liabilities. See Note 8.
Revenues The Company recognizes sales revenues for gas, oil and condensate and NGLs based on the amount of gas, oil and condensate
and NGLs sold to purchasers when delivery to the purchaser has occurred and title has transferred. This occurs when production has been
delivered to a pipeline or a tanker lifting has occurred. The Company follows the sales method of accounting for natural gas production
imbalances. If the Company’s excess sales of production volumes for a well exceed the estimated remaining recoverable reserves of the well, a
liability is recognized. No receivables are recorded for those wells on which the Company has taken less than its proportionate share of
production.
Realized gains and losses on derivative instruments that received cash flow hedge accounting treatment and any associated hedge
ineffectiveness, as well as realized and unrealized gains and losses on derivative instruments that did not receive cash flow hedge accounting
treatment are included in gas sales, oil and condensate sales and NGLs sales. The Company discontinued hedge accounting effective
January 1, 2007, as discussed in Derivative Instruments below.
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The Company enters into buy/sell arrangements for a portion of its crude oil production. Under these arrangements, barrels are sold at
prevailing market prices at a location, and in an additional transaction entered into in contemplation of the sale transaction with the same third
party, barrels are re-purchased at a different location at the market prices prevailing at that location. The barrels are then sold at prevailing
market prices at the re-purchase location. These arrangements are often a requirement of private transporters. In these transactions, the re-
purchase price is more than the original sales price with the difference representing a transportation fee. Other buy/sell arrangements are
entered in order to shift the ultimate sales point of the Company’s production to a more liquid location, thereby avoiding potential marketing
fees and other market-price reductions. In these transactions, the sales price in the field and the re-purchase price are each at prevailing market
prices at the respective locations. Anadarko uses these buy/sell arrangements in its marketing and trading activities and, as such, reports
these transactions in the income statement on a net basis.
Anadarko provides gathering, processing and treating services pursuant to a variety of contracts. Under these arrangements, the
Company receives fees or is able to retain a percentage of products and recognizes revenue at the time the services are performed or product is
sold. These revenues are included in gathering, processing and marketing sales.
Marketing margins related to the Company’s production are included in gas sales, oil and condensate sales and NGLs sales. Marketing
margins related to purchases of third-party commodities are included in gathering, processing and marketing sales.
Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be
cash equivalents.
Inventories Materials and supplies and commodity inventories are stated at the lower of average cost or market.
Properties and Equipment Properties and equipment are stated at cost less accumulated depreciation, depletion and amortization (DD&A).
Costs of improvements that appreciably improve the efficiency or productive capacity of existing properties or extend their lives are
capitalized. Maintenance and repairs are expensed as incurred. Upon retirement or sale, the cost of properties and equipment, net of the related
accumulated DD&A, is removed and, if appropriate, gains or losses are recognized in Revenues and Other.
Oil and Gas Properties The Company adopted the successful efforts method of accounting in 2007, and financial information for 2006 has
been revised to reflect retrospective application of this accounting principle.
Under successful efforts, exploration costs such as exploratory geological and geophysical costs, delay rentals and exploration overhead
are charged against earnings as incurred. Acquisition costs and costs of drilling exploratory wells are capitalized pending determination of
whether proved reserves can be attributed to the area as a result of drilling the well. If management determines that commercial quantities of
hydrocarbons have not been discovered, capitalized costs associated with exploratory wells are charged to exploration expense.
Acquisition costs of unproved leaseholds are assessed for impairment during the holding period and transferred to proved oil and gas
properties to the extent associated with successful exploration activities. Significant undeveloped leases are assessed periodically for
impairment individually, based on the Company’s current exploration plans, and a valuation allowance is provided if impairment is indicated.
Unproved oil and gas properties with individually insignificant lease acquisition costs are amortized on a group basis (thereby establishing a
valuation allowance) over the average lease terms of the leases at rates that provide for full amortization of unsuccessful leases upon
expiration or abandonment. Costs of expired or abandoned leases are charged against the valuation allowance, while costs of productive
leases are transferred to proved oil and gas
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properties. Costs of maintaining and retaining undeveloped leaseholds, as well as amortization of individually insignificant leases and
impairment of unsuccessful leases, are included in exploration expense.
Capitalized Interest Interest is capitalized as part of the historical cost of developing and constructing assets for significant projects.
Significant oil and gas investments in unproved properties and significant exploration and development projects for which DD&A expense is
not currently recognized and exploration or development activities that are in progress, qualify for interest capitalization. Interest is capitalized
until the asset is ready for service. Capitalized interest is determined by multiplying the Company’s weighted-average borrowing cost on debt
by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the
associated capitalized interest is expensed through depreciation or impairment, along with other capitalized costs related to that asset.
Asset Retirement Obligations An asset retirement obligation associated with the retirement of a tangible long-lived asset is recognized as a
liability in the period incurred or when it becomes determinable, with an associated increase in the carrying amount of the related long-lived
asset. The cost of the tangible asset, including the asset retirement cost, is depreciated over the useful life of the asset. The asset retirement
obligation is recorded at its estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement
obligation discounted at the company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted
liability is accreted to its expected settlement value. If the estimated future cost of the asset retirement obligation changes, an adjustment is
recorded to both the asset retirement obligation and the long-lived asset. Revisions to estimated asset retirement obligations can result from
changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment.
Impairments Properties and equipment, net of salvage value, are reviewed for impairment at the lowest level for which identifiable cash flows
are independent of cash flows from other assets when facts and circumstances indicate that their net book values may not be recoverable. In
performing this review, an undiscounted cash flow test is performed on the impairment unit. If the sum of these undiscounted estimated future
net cash flows is less than the net book value of the property, an impairment loss is recognized for the excess, if any, of the property’s net
book value over its estimated fair value, which is based on discounted future net cash flows or earnings multiples, as appropriate.
Depreciation, Depletion and Amortization Costs of drilling and equipping successful exploratory wells, development wells, costs to
construct or acquire facilities other than offshore platforms and associated asset retirement costs are depreciated using the unit-of-production
method based on total estimated proved developed oil and gas reserves. Costs of acquiring proved properties, including leasehold acquisition
costs transferred from unproved leaseholds and costs to construct or acquire offshore platforms and associated asset retirement costs, are
depleted using the unit-of-production method based on total estimated proved developed and undeveloped reserves. Mineral properties are
depleted using the unit-of-production method. All other properties are stated at historical acquisition cost, net of allowance for impairment,
and depreciated using the straight-line method over the useful lives of the assets, which range from three to 15 years for furniture and
equipment, up to 40 years for buildings, and up to 47 years for gathering facilities.
Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price of a business over the estimated fair value of the
assets acquired and liabilities assumed. The Company assesses the carrying amount of goodwill by testing the goodwill for impairment
annually, as of January 1, unless facts and circumstances make it necessary to test more frequently. The impairment test requires allocating
goodwill and all
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other assets and liabilities to business levels referred to as reporting units. The reporting units used to evaluate and measure goodwill for
impairment are determined from the manner in which the business is managed. A reporting unit is an operating segment or a component that is
one level below an operating segment. Anadarko has allocated goodwill to three reporting units. These reporting units are oil and gas
exploration and production, gathering and processing, and transportation. The fair value of each reporting unit is determined and compared to
the carrying value of the reporting unit. If the fair value of the reporting unit is less than the carrying value, including goodwill, then the
goodwill is written down to the implied fair value of the goodwill through a charge to expense.
Changes in goodwill may result from, among other things, changes in deferred income tax liabilities related to previous acquisitions,
impairments, future acquisitions or future divestitures.
Other intangible assets represent contractual rights obtained in connection with a business combination that have favorable contractual
terms relative to market as of the acquisition date. Other intangible assets are amortized over their estimated useful lives and are reviewed for
impairment whenever impairment indicators are present. See Note 7.
Derivative Instruments Anadarko utilizes derivative instruments in conjunction with its marketing and trading activities and to manage price
risk attributable to the Company’s forecasted sales of oil, natural gas and NGLs production. Anadarko also periodically utilizes derivatives to
manage its exposure associated with natural gas processing, interest rates and foreign currency exchange rates. All derivatives that do not
satisfy the normal purchases and sales exception criteria are carried on the balance sheet at fair value and are included in other current assets,
other assets, accrued expenses or other long-term liabilities, depending on the position and expected timing of settlement. To the extent a legal
right of offset with a counterparty exists, the Company reports derivative assets and liabilities on a net basis. Anadarko has exposure to credit
risk to the extent the counterparty to the derivative instruments is unable to meet its settlement commitment. The Company actively monitors
the creditworthiness of each counterparty and assesses the impact, if any, on its derivative positions.
Through the end of 2006, Anadarko applied hedge accounting to certain commodity and interest rate derivatives whereby gains and
losses on these instruments were recognized in earnings in the same period in which the hedged transactions affected earnings. Effective
January 1, 2007, Anadarko discontinued its application of hedge accounting to all commodity and interest rate derivatives. As a result of this
change, both realized and unrealized gains and losses on derivative instruments are recognized in gas sales, oil and condensate sales or
interest expense as they occur. Net derivative losses attributable to derivatives previously subject to hedge accounting and residing in
accumulated other comprehensive income as of December 31, 2008 will be reclassified to earnings in future periods as the economic
transactions to which the derivatives relate affect earnings.
Accounts Payable Accounts payable includes property expenditure accruals of $579 million and $504 million at December 31, 2008 and 2007,
respectively. Also included in accounts payable at December 31, 2008 and 2007 are liabilities of $391 million and $302 million, respectively,
representing the amount by which checks issued, but not presented to the Company’s banks for collection, exceeded balances in applicable
bank accounts.
Legal Contingencies The Company is subject to legal proceedings, claims and liabilities which arise in the ordinary course of its business.
Except for legal contingencies acquired in a business combination, which are recorded at fair value, the Company accrues for losses associated
with legal claims when such losses are probable and can be reasonably estimated. These estimates are adjusted as additional information
becomes available or circumstances change. See Note 14.
Environmental Contingencies Except for environmental contingencies acquired in a business combination that are recorded at fair value, the
Company accrues for losses associated with environmental remediation
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obligations when such losses are probable and can be reasonably estimated. Accruals for estimated losses from environmental remediation
obligations are recognized no later than the time of the completion of the remediation feasibility study. These accruals are adjusted as
additional information becomes available or circumstances change. Costs of future expenditures for environmental remediation obligations are
not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded at their undiscounted
value as assets when their receipt is deemed probable. See Note 14.
Pension Plans, Other Postretirement Benefits and Employee Savings Plans The Company accounts for its defined benefit pension and
other postretirement benefit plans in accordance with SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R).”
The plans are actuarially evaluated, incorporating the use of various assumptions. Critical assumptions for pension and other
postretirement plans include the discount rate and the expected rate of return on plan assets (for funded pension plans). Other assumptions
involve demographic factors such as retirement, mortality, turnover and the rate of compensation increases. The Company evaluates
assumptions annually and modifies the assumptions as warranted. See Note 20.
Income Taxes The Company files various United States federal, state and foreign income tax returns. Deferred federal, state and foreign
income taxes are provided on temporary differences between the financial statement carrying amounts of assets and liabilities and their
respective tax basis. See Note 16.
Anadarko adopted the provisions of FIN 48 on January 1, 2007. FIN 48 defines the criteria an individual tax position must meet for any
part of the benefit of that position to be recognized in the financial statements. FIN 48 also provides guidance, among other things, on the
measurement of the income tax benefit associated with uncertain tax positions, de-recognition, classification, interest and penalties and
financial statement disclosures.
Stock-Based Compensation The Company accounts for stock-based compensation at fair value. The Company grants various types of
stock-based awards including stock options, nonvested equity shares (restricted stock awards and units) and performance-based awards. The
fair value of stock option awards is determined using the Black-Scholes option pricing model. Restricted stock awards and units are valued
using the market price of Anadarko common stock on the grant date. For performance-based awards, the fair value of the market condition
portion of the award is measured using a Monte Carlo simulation. The performance condition portion of the performance-based awards is
measured at the market price of Anadarko common stock on the grant date. Liability-classified awards are remeasured at estimated fair value at
the end of each period based on the specifications of each plan. The Company records compensation cost for stock-based compensation
awards over the requisite service period. Compensation cost is recognized net of estimated forfeitures. As each award vests, an adjustment is
made to compensation cost for any difference between the estimated forfeitures and the actual forfeitures related to the vested awards. For
equity awards that contain service and market conditions, compensation cost is recorded using the straight-line method. If the requisite
service period is satisfied, compensation cost is not adjusted unless the award contains a performance condition. If an award contains a
performance condition, expense is recognized only for those shares that ultimately vest using the fair value per share measured at the grant
date. See Note 12.
Discontinued Operations and Assets Held for Sale The Company’s Canadian operations have been classified as discontinued operations.
Unless otherwise indicated, information presented in the notes to the financial statements relates only to Anadarko’s continuing operations.
Additionally, Anadarko classifies certain significant assets or groups of assets as held for sale should certain criteria be satisfied. Assets held
for sale are carried at the
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lesser of fair value less cost to sell or historical net book value. Assets included in held for sale are expected to be disposed of within a year.
Investments accounted for under the equity method and unproved property cannot be classified as held for sale under current accounting
rules. See Note 2.
Accounting for Sales of Subsidiary Member Interest Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 51,
“Accounting for Sales of Stock by a Subsidiary” (SAB 51), provides guidance on accounting for the effect of issuances of a subsidiary’s
stock on the parent’s investment in that subsidiary. SAB 51 allows registrants to elect an accounting policy of recording such increases or
decreases in a parent’s investment (SAB 51 credits or charges, respectively) either in income or in stockholders’ equity. In accordance with the
election provided in SAB 51, Anadarko adopted a policy of recording such SAB 51 credits or charges directly to paid-in capital in
stockholders’ equity. See Note 3.
Earnings Per Share The Company’s basic earnings per share (EPS) amounts have been computed based on the average number of shares
of common stock outstanding for the period. Diluted EPS amounts include the effect of the Company’s outstanding stock options, restricted
stock awards, restricted stock units and performance-based stock awards under the treasury stock method, if including such potential shares
of common stock is dilutive. See Note 11.
Recently Issued Accounting Standards Not Yet Adopted In June 2008, the FASB issued FSP Emerging Issues Task Force (EITF) No. 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP EITF No. 03-6-1
addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and are therefore
required to be included in the earnings allocation in calculating earnings per share under the two-class method described in SFAS No. 128,
“Earnings per Share.” FSP EITF No. 03-6-1 requires companies to treat unvested share-based payment awards that have non-forfeitable rights
to dividend or dividend equivalents as a separate class of securities in calculating earnings per share. FSP EITF No. 03-6-1 is effective for fiscal
years beginning after December 15, 2008; early adoption is not permitted. The Company adopted FSP EITF No. 03-6-1 effective January 1, 2009.
FSP EITF No. 03-6-1 will not affect Anadarko’s presentation of earnings per share.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 does
not change the accounting policy for derivatives, but requires enhanced disclosures about how and why an entity uses derivative
instruments, how derivative instruments and related hedged items (if any) are accounted for, and how they affect the Company’s financial
position, financial performance and cash flows. SFAS No. 161 is effective for Anadarko for annual and interim periods beginning with the first
quarter of 2009. Anadarko did not elect early adoption. SFAS No. 161 is a disclosure requirement that does not affect Anadarko’s consolidated
financial statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (SFAS No. 141(R)), a replacement of SFAS
No. 141, “Business Combinations.” SFAS No. 141(R) modifies the accounting for business combinations under SFAS No. 141 and will apply to
Anadarko prospectively for future business combinations with an acquisition date on or after January 1, 2009. SFAS No. 141(R) expands the
scope of what will qualify as a business combination by expanding the definition of what qualifies as a business. Additionally, for already
completed business combinations, SFAS No. 141(R) nullifies EITF Issue No. 93-7, “Uncertainties Related to Income Taxes in a Purchase
Business Combination,” such that future changes in estimates of income tax uncertainties that existed at the time of, or arose in connection
with past purchase business combinations, will no longer be accounted for as adjustments to goodwill, but instead will be accounted for as
adjustments to current income.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — An Amendment of
ARB No. 51”. SFAS No. 160 establishes new accounting and reporting
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standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the
recognition of a noncontrolling interest (minority interest) as a component of consolidated equity. This is a change from the current practice to
present noncontrolling interests in liabilities or between liabilities and stockholders’ equity. Similarly, SFAS No. 160 requires consolidated net
income and comprehensive income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling
interests. Anadarko will be required to adopt accounting provisions of SFAS No. 160 prospectively with respect to transactions involving
noncontrolling financial interests that occur on or after January 1, 2009. Presentation and disclosure requirements of SFAS No. 160 will also be
applied effective January 1, 2009, but with respect to all periods presented. After adopting SFAS No. 160 in 2009, the Company will apply
provisions of this standard to noncontrolling interests created or acquired in future periods. Upon adoption, the Company will reclassify its
minority interests to stockholders’ equity.
2. Acquisitions, Divestitures and Other

Acquisitions On August 10, 2006, Anadarko completed the acquisition of Kerr-McGee, an independent exploration and production company,
in an all-cash transaction totaling $16.5 billion, plus the assumption of debt of approximately $2.6 billion. On August 23, 2006, Anadarko
completed the acquisition of Western, also an independent exploration and production company, in an all-cash transaction totaling $4.8
billion, plus the assumption of debt of $625 million.
The following table presents summarized pro forma information for Anadarko as if the acquisitions occurred on January 1, 2006.
2006
millions except per share amounts
Revenues and other $13,712
Income from continuing operations $ 2,490
Earnings per share from continuing operations — basic $ 5.41
Earnings per share from continuing operations — diluted $ 5.37
The pro forma information is presented for illustration purposes only, in accordance with the assumptions set forth below. The pro forma
information does not reflect any cost savings or other synergies anticipated as a result of the acquisitions or any future acquisition-related
expenses. The pro forma adjustments are based on estimates and assumptions. Management believes the estimates and assumptions are
reasonable, and that the significant effects of the transactions are properly reflected.
The pro forma information for 2006 is a result of combining the income statement of Anadarko with the pre-acquisition results from
January 1, 2006 of Kerr-McGee and Western adjusted for 1) recording pro forma interest expense on debt incurred to acquire Kerr-McGee and
Western; 2) DD&A expense of Kerr-McGee and Western calculated based on the adjusted basis of the properties acquired using the purchase
method of accounting; and 3) the related income tax effects of these adjustments based on the applicable statutory tax rates. The pro forma
information for 2006 has been revised to reflect retrospective application of the successful efforts method of accounting.
Gains (Losses) on Divestitures and Other During 2008, 2007 and 2006, the Company closed several unrelated property divestiture
transactions, realizing proceeds of approximately $2.5 billion, $11.1 billion and $1 billion before income taxes, respectively. During 2008, 2007
and 2006, net gains on divestitures were $1.2 billion, $4.7 billion and $26 million, respectively.
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2. Acquisitions, Divestitures and Other (Continued)
During 2008, the Company entered into an agreement to divest its 50% interest in the Peregrino field, offshore Brazil, and certain related
assets. The Peregrino divestiture closed in December 2008. Anadarko received approximately $1.4 billion in net after-tax cash proceeds from
the sale, recognizing a gain of approximately $800 million. Additionally, in connection with the sale of its interest in the Peregrino field,
Anadarko may receive contingent consideration in future periods. Contingent consideration is based on the value of oil produced from
properties subject to the sale transaction. The Company has not recorded any amounts for contingent consideration.
The 2007 gains included $4.1 billion related to the divestiture of certain oil and gas properties and $0.6 billion related to the divestiture of
certain gathering and processing facilities. The 2006 gains primarily related to the divestiture of certain international oil and gas properties.
In 2008, gains (losses) on divestitures and other, net includes a net $82 million ($52 million after tax) reduction related to corrections
resulting from analysis of property records after the adoption of the successful efforts method of accounting. This net amount includes a
reduction of $163 million related to 2007. Management concluded that this misstatement was not material relative to 2007 interim and annual
results, or to the 2008 periods, and corrected the error in the first quarter of 2008.
Assets Held for Sale At December 31, 2007, assets and liabilities associated with certain properties in northern Louisiana and the Rocky
Mountain region were classified as held for sale.
Discontinued Operations In November 2006, Anadarko sold its wholly-owned subsidiary, Anadarko Canada Corporation, for approximately
$4.3 billion before taxes. Accordingly, the results of Anadarko’s Canadian operations have been classified as discontinued operations in the
consolidated statements of income and cash flows. Activity in 2008 and 2007 relates primarily to the impact of an adjustment to an indemnity
obligation provided by the Company to the purchaser, as well as expenses associated with finalizing exit activities. See Note 14.
In December 2006, the Company also exchanged its remaining oil and gas properties in Canada for interests in oil and gas properties in
the United States. The associated $70 million pretax gain is included in gain on disposition of discontinued operations.
The following table summarizes the amounts included in income from discontinued operations for all periods presented.
2008 2007 2006

millions
Revenues and other $ — $ 24 $ 717
Income from discontinued operations $ — $ 18 $ 311
Gain on disposition of discontinued operations 98 8 2,494
Income from discontinued operations before income taxes 98 26 2,805
Income tax expense 35 15 530
Income from discontinued operations, net of taxes $ 63 $ 11 $2,275
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2. Acquisitions, Divestitures and Other (Continued)
Total income taxes differed from the amount computed by applying the U.S. statutory income tax rate to income from discontinued
operations. The sources of these differences are as follows:
2008 2007 2006

millions except percentages
Income from discontinued operations $ 98 $ 26 $2,805
Statutory tax rate 35% 35% 35%
Tax computed at statutory rate $ 34 $ 9 $ 982
Adjustment resulting from:
State income taxes (net of federal income tax benefit) 1 — —
Foreign taxes (less than) greater than federal statutory tax rate — (2) 48
Cross border financing — — (45)
Effect of change in Canadian income tax rate — — (79)
Tax on sale of discontinued operations differing from statutory rate — 8 (376)
Total income tax expense related to discontinued operations $ 35 $ 15 $ 530
Severance and Asset Realignment Expenses During 2007 and 2006, general and administrative expense included charges of $85 million and $77
million, respectively, associated with employee severance and benefits arising from the Company’s post-acquisition asset realignment and
restructuring efforts initiated in the fourth quarter of 2006. These expenses were not material in 2008.
During 2007, oil and gas operating expense included charges of $20 million for employee-related severance costs associated with field
operations. During 2006, oil and gas operating expense included $5 million related to severance and benefits associated with the Company’s
post-acquisition asset realignment and restructuring efforts. At December 31, 2008, there was no remaining liability.
3. Minority Interests
During the second quarter of 2008, Western Gas Partners, LP (WES) completed its initial public offering of 20.8 million common units
(representing a 38.4% limited partner interest) for net proceeds of $321 million ($343 million less $22 million for underwriting discounts and
structuring fees). WES is a Delaware limited partnership formed by Anadarko to own, operate, acquire and develop midstream assets.
Anadarko contributed assets to WES in exchange for an aggregate 59.6% limited partner interest (consisting of common and subordinated
limited partner units) in WES, a 2% general partner interest and incentive distribution rights (IDRs). IDRs entitle the holder to specified
increasing percentages of cash distributions as WES’s per-unit cash distributions increase. In addition, Anadarko maintains control over the
assets owned by WES through sole indirect ownership of the general partner interests. Proceeds from the offering were used to reduce debt.
The common units have preference over the subordinated units with respect to cash distributions. Accordingly, all proceeds from the
sale of the common units were recorded as minority interest on the consolidated balance sheet. The subordinated units will convert into an
equal number of common units upon termination of the subordination period. Generally, the subordination period will end when either:
(i) WES has paid at least $0.30 per quarter on each outstanding common unit, subordinated unit and general partner unit for any three
consecutive four quarterly periods ending on or after June 30, 2011; or
(ii) WES has paid at least $0.45 per quarter on each outstanding common unit, subordinated unit and general partner unit for any four
consecutive quarters.
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3. Minority Interests (Continued)
When the subordinated units convert to common units, the Company will recognize an increase in additional paid-in capital in
stockholders’ equity.
The results of operations and financial position of WES are included in the consolidated financial statements of Anadarko. The portion
of WES’ results of operations that is attributable to common units held by the public (units not held by Anadarko) is recorded as minority
interests.
Pursuant to the terms of its partnership agreement, WES is required to pay a minimum quarterly distribution of $0.30 per unit to the extent
it has sufficient cash available for distribution. During the third quarter of 2008, WES paid a prorated quarterly cash distribution of $0.1582 per
unit for the second quarter of 2008, which corresponds to a quarterly distribution of $0.30 per unit on a full quarter basis. In the fourth quarter
of 2008, WES paid a quarterly cash distribution of $0.30 per unit for the third quarter of 2008. Subsequent to December 31, 2008, WES declared
a quarterly distribution of $0.30 per unit for the fourth quarter of 2008.
4. Inventories
The major classes of inventories, which are included in other current assets, are as follows:
2008 2007
millions
Materials and supplies $280 $202
Natural gas 51 42
Crude oil and NGLs 89 114
Total $420 $358
5. Properties and Equipment

A summary of the cost of properties and equipment by function follows:
2008 2007
millions
Oil and gas (includes unproved properties of $10,428 and $13,106
as of December 31, 2008 and 2007, respectively) $41,496 $39,219
Gathering, processing and marketing 3,510 2,987
Minerals 1,196 1,198
Other 871 801
Total $47,073 $44,205
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5. Properties and Equipment (Continued)
During 2008, 2007 and 2006, the Company recorded provisions for impairments of $211 million, $51 million and $327 million, respectively.
Impairments in 2008 include $113 million associated with various oil and gas producing properties in the United States, included in the oil and
gas exploration and production operating segment, and $98 million associated with certain gathering and processing facilities in the United
States, included in the midstream operating segment, primarily as a result of lower commodity prices at year-end 2008. Impairments in 2006
include a $166 million loss associated with the contract and structural changes in Venezuela and a $139 million impairment related to the
decision to suspend construction of the Company’s liquefied natural gas facility in Nova Scotia. Fair value of the assets to be impaired is
generally determined by discounting anticipated future net cash flows.
Suspended Exploratory Drilling Costs If an exploratory well provides evidence as to the existence of sufficient quantities of hydrocarbons to
justify potential completion as a producing well, drilling costs associated with the well are initially capitalized, or suspended, pending a
determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. This
determination may take longer than one year in certain areas (generally, deepwater, unconventional gas onshore and international locations)
depending upon, among other things, 1) the amount of hydrocarbons discovered, 2) the outcome of planned geological and engineering
studies, 3) the need for additional appraisal drilling activities to determine whether the discovery is sufficient to support an economic
development plan and 4) the requirement for government sanctioning in certain international locations before proceeding with development
activities.
At the end of each quarter, management reviews the status of all suspended exploratory drilling costs in light of ongoing exploration
activities — in particular, whether the Company is making sufficient progress in its ongoing exploration and appraisal efforts or, in the case of
discoveries requiring government sanctioning, whether development negotiations are under way and proceeding as planned. If management
determines that future appraisal drilling or development activities are unlikely to occur, any associated suspended exploratory drilling costs are
expensed in that period.
The following table presents the amount of suspended exploratory drilling costs relating to continuing operations at December 31 for
each of the last three years, and changes in those amounts during the years then ended. The table excludes amounts capitalized and
subsequently reclassified to proved oil and gas properties or charged to expense in the same year.
2008 2007 2006

millions
Balance at January 1 $ 308 $ 312 $112
Additions pending the determination of proved reserves 211 252 352
Reclassifications to proved properties (175) (87) (57)
Charges to exploration expense (65) (169) (95)
Balance at December 31 $ 279 $ 308 $312
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5. Properties and Equipment (Continued)
The following table presents the total amount of suspended exploratory drilling costs as of December 31, 2008 by geographic area,
including the year the costs were originally incurred.
Year Costs
Incurred
Total 2008 2007 2006
millions
United States — Offshore $ 27 $ — $ — $ 27
United States — Onshore 87 58 25 4
International 165 114 51 —
$ 279 $ 172 $ 76 $ 31
Suspended exploratory drilling costs capitalized for a period greater than one year at December 31, 2008
(included in the table above) $ 114
Well costs that have been suspended for longer than one year are associated with 12 projects. The majority of such costs associated
with projects in the United States are suspended pending the completion of an economic evaluation including, but not limited to, results of
additional appraisal drilling, facilities, infrastructure, well test analysis, additional geological and geophysical data and approval of a
development plan. The international projects with costs suspended for longer than one year are primarily suspended pending the results of
additional appraisal drilling. Management believes these projects with suspended exploratory drilling costs have sufficient quantities of
hydrocarbons to justify their potential development and is actively pursuing efforts to assess whether reserves can be attributed to their
respective areas. If additional information becomes available that raises substantial doubt regarding the economic or operational viability of
any of these projects, the associated costs will be expensed.
6. Investments
Noncontrolling Mandatorily Redeemable Interests In 2007, Anadarko contributed certain of its oil and gas properties and gathering and
processing assets, with an aggregate fair value of approximately $2.9 billion at the time of contribution, to newly formed unconsolidated
entities in exchange for non-controlling mandatorily redeemable interests in those entities. The Company accounts for its investment in these
entities under the equity method of accounting. At December 31, 2008, the carrying amount of these investments was $2.8 billion, while the
carrying amount of notes payable to the investees was $2.9 billion. Anadarko has legal right of setoff and intends to net-settle its obligations
under each of the notes payable to the investees and the distributable value of its interest in the corresponding investee. Accordingly, the
investments and the obligations are presented net on the consolidated balance sheet and are included in other long-term liabilities - other for
all periods presented. Other income (expense) for 2008 and 2007 included interest expense on the notes payable to the investee entities of
$(123) million and $(102) million, respectively, and equity in earnings from Anadarko’s investments in the investee entities of $89 million and
$98 million, respectively.
Permian LLC In March 2007, Anadarko contributed its working interests in proved and unproved oil and gas properties located in the
Permian basin to an unconsolidated entity, Permian Basin LLC (the Permian LLC). Subsequent to its formation, the Permian LLC loaned $1.0
billion to Anadarko for a 35-year term. In exchange for its contribution of assets to the Permian LLC, Anadarko received a noncontrolling
mandatorily redeemable interest in that entity, which entitles Anadarko to a LIBOR-based preferred return on the value of the contributed
assets ($1 billion), plus a common return consisting of a 5% participation in profits, losses and any residual value
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6. Investments (Continued)
of the Permian LLC. At December 31, 2008, the priority return rate was 1.97%. Anadarko’s interest also provides Anadarko with limited consent
rights with respect to certain matters, such as acquisition and disposition of assets and incurrence of debt. The exchange of oil and gas
property interests for the interest in the Permian LLC was accounted for at fair value, which was determined based on the consideration
received. Anadarko recognized a gain of approximately $443 million on the exchange.
The common equity of the Permian LLC is 95% owned by a third party that also maintains operational control over the assets.
Distributions to the Permian LLC interest holders, including Anadarko, are payable quarterly. Anadarko may redeem its noncontrolling interest
and the owner of the controlling interest in the Permian LLC may cause the redemption of Anadarko’s interest after March 2022. Anadarko’s
interest is mandatorily redeemable in March 2037. Redemption of Anadarko’s interest for any reason is based on the fair value of Anadarko’s
capital account in the Permian LLC and is net-settled against the fair value of Anadarko’s note payable to the Permian LLC.
The interest rate on the $1.0 billion 35-year note is LIBOR-based, varies based on Anadarko’s credit rating, and was 3.00% at
December 31, 2008. Interest on the note is due quarterly, while principal is due at maturity, subject to the net settlement provision. The note is
equal in seniority to Anadarko’s other unsecured unsubordinated indebtedness and contains a maximum 67% debt to capital covenant. The
loan was funded through the initial contribution to the Permian LLC by the third-party investor in exchange for a controlling interest in the
Permian LLC. Proceeds from the note were used to repay a portion of Anadarko’s acquisition facility debt balance.
Midstream LLCs In July 2007, Anadarko contributed its interests in the Chaney Dell and Midkiff/Benedum natural gas gathering systems
and associated processing plants to two separate unconsolidated entities (the Midstream LLCs). Subsequent to their formation, the Midstream
LLCs loaned an aggregate of approximately $1.9 billion to Anadarko for a 35-year term. In exchange for its contribution of assets to the
Midstream LLCs, Anadarko received noncontrolling mandatorily redeemable interests in the Midstream LLCs, which entitle Anadarko to a
LIBOR-based preferred return on the value of the contributed midstream operations ($1.85 billion), plus a common return consisting of a 5%
participation in profits, losses and residual value of each of the Midstream LLCs. At December 31, 2008, the priority return rate was 1.91%.
Anadarko’s interest also provides Anadarko with limited consent rights with respect to certain matters, such as acquisition and disposition of
assets and incurrence of debt. The exchange of the Chaney Dell and Midkiff/Benedum midstream systems for the interests in the Midstream
LLCs was accounted for at fair value, which was determined based on the consideration received. Anadarko recognized a gain of
approximately $300 million on the exchanges.
The common equity of each of the Midstream LLCs is 95% owned by a third party that also maintains operational control over the
assets. Distributions to the Midstream LLC interest holders, including Anadarko, are payable quarterly. Anadarko may separately redeem its
interests and the owner of the controlling interest in the Midstream LLCs may separately cause the redemption of Anadarko’s interests after
July 2022. Anadarko’s interests are mandatorily redeemable in July 2037. Redemption of Anadarko’s interests for any reason is based on the
fair value of Anadarko’s capital account in the respective Midstream LLC and is net-settled against the fair value of Anadarko’s note payable
to that entity.
The 35-year notes have a variable LIBOR-based interest rate that varies based on Anadarko’s credit rating, and was 3.00% at
December 31, 2008. Interest on the notes is due quarterly, while the principal on the notes is due at maturity, subject to the net settlement
provision. The notes are equal in seniority to Anadarko’s other unsecured unsubordinated indebtedness and were funded through the capital
contributions to the Midstream LLCs by the third-party investor in exchange for its controlling interests in those entities. Note proceeds were
used by Anadarko to repay a portion of Anadarko’s acquisition facility debt balance.
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6. Investments (Continued)
Midstream Financing Arrangement As further discussed in Note 10, in December 2007, Anadarko and an entity formed by a group of
unrelated third-party investors (the Investor) formed Trinity Associates LLC (Trinity). Trinity was initially capitalized with a $100 million cash
contribution from Anadarko in exchange for Class A member and managing member interests in Trinity and a $2.2 billion cash contribution
from the Investor in exchange for a Class B member cumulative preferred interest. Trinity invested $100 million in a U.S. Government securities
money market fund and loaned $2.2 billion to a wholly-owned subsidiary of Anadarko, Midstream Holding. The Company used all of the loan
proceeds received by Midstream Holding to repay a portion of the Company’s acquisition facility indebtedness. See Note 10 for additional
information about the Midstream Subsidiary Note Payable.
Through its Class A member and managing member interests, Anadarko has significant influence over Trinity and accounts for its
investment in Trinity under the equity method of accounting. Trinity’s earnings, which consist primarily of interest income from the Midstream
Holding note and the government money market fund investment are to be allocated first to the Investor’s Class B member interest until its
cumulative preferred return is satisfied, with the remaining earnings allocated to Anadarko’s Class A member interest. Anadarko absorbs first-
dollar losses of Trinity, if any, until its Class A member capital account in Trinity is reduced to zero. As of December 31, 2008, the carrying
amount of Anadarko’s investment in Trinity was $100 million and is included in other assets. Investment earnings are included in other income
(expense) and were not material.
Other During the fourth quarter of 2008, Anadarko changed the method of accounting for its investment in Petroritupano, S.A.
(Petroritupano), a Venezuelan mixed company, to the cost method. The Company determined that it was no longer appropriate to account for
the investment under the equity method. As of December 31, 2008 and 2007, the Company’s investment in Petroritupano was $229 million and
$222 million, respectively, and is included in other assets.
7. Goodwill and Other Intangible Assets
During 2008, the carrying amount of goodwill increased $327 million largely attributable to revisions in estimates of deferred tax liabilities
recorded upon the acquisitions of Kerr-McGee and Western. Additionally, for certain divestiture transactions completed during 2007, goodwill
of $329 million was included in the carrying amount of net assets divested, thereby reducing the realized gain on divestitures. None of
Anadarko’s goodwill is deductible for tax purposes.
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7. Goodwill and Other Intangible Assets (Continued)
Changes in the carrying amount of goodwill by segment for 2008 and 2007 are as follows:
2008 2007
Oil and Gas Oil and Gas
Exploration Exploration
& &
Production Midstream Total Production Midstream Total
millions
Balance at beginning of year $ 4,847 $ 108 $4,955 $ 4,048 $ — $4,048
Goodwill associated with 2006
acquisitions 298 31 329 901 170 1,071
Goodwill associated with
divestitures, including changes in
estimates — — — 17 (62) (45)
Goodwill adjustment related to FIN
48 adoption — — — (139) — (139)
Other changes, net (2) — (2) 20 — 20
Balance at end of year $ 5,143 $ 139 $5,282 $ 4,847 $ 108 $4,955
As a result of general economic conditions, declines in commodity prices, and declines in its market capitalization compared to the book
value of its stockholders’ equity during the fourth quarter of 2008, the Company determined an interim impairment test as of December 31, 2008
was appropriate. Anadarko tested its goodwill for impairment and concluded there was no impairment at December 31, 2008.
Intangible assets subject to amortization at December 31, 2008 and 2007 are as follows:
Gross Carrying Accumulated Net Carrying

Amount Amortization Amount
millions
Balance at December 31, 2008
Drilling contracts $ 155 $ (153) $ 2
Transportation contracts 171 (76) 95
Offshore platform leases 60 (26) 34
$ 386 $ (255) $ 131
Balance at December 31, 2007
Drilling contracts $ 155 $ (118) $ 37
Transportation contracts 171 (38) 133
Offshore platform leases 60 (19) 41
$ 386 $ (175) $ 211
Costs associated with acquired drilling contract intangibles were initially capitalized as intangible assets. Amortization of these costs is
recorded to oil and gas properties as exploratory and development drilling costs and ultimately expensed through depletion. In 2008, 2007 and
2006, $35 million, $81 million and $37 million, respectively, of drilling contract intangible value was amortized and recorded to oil and gas
properties. Drilling contract intangibles relate to the Company’s oil and gas exploration and production segment.
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7. Goodwill and Other Intangible Assets (Continued)
Costs associated with acquired transportation contract and offshore platform lease intangibles were capitalized as intangible assets.
Amortization of these intangible assets reduces earnings. Amortization expense for the transportation contract and offshore platform lease
intangibles was $33 million, $47 million and $10 million for 2008, 2007 and 2006, respectively. The net carrying amount for transportation
contracts was reduced by a $12 million impairment charge in 2008. Transportation contract intangibles relate to the Company’s marketing
segment, and offshore platform lease intangibles relate to the Company’s oil and gas exploration and production segment.
The estimated aggregate amortization expense for all intangible assets for the next five years is $33 million, $23 million, $20 million, $24
million, and $8 million, respectively.
8. Derivative Instruments
The Company is exposed to commodity price and interest rate risk, and management believes it prudent to periodically reduce the
Company’s exposure to cash-flow variability resulting from this volatility. Accordingly, the Company enters into certain derivative financial
instruments in order to manage exposure to commodity price risk inherent in the Company’s oil and gas production and gas processing
operations. Specifically, the Company utilizes futures, swaps and options. Futures contracts and commodity swap agreements are used to fix
the price of expected future oil and gas sales at major industry trading locations, such as Henry Hub, Louisiana for gas and Cushing,
Oklahoma for oil. Basis swaps are used to fix or float the price differential between the price of gas at Henry Hub and various other market
locations. Options are used to fix a floor and a ceiling price (collar) for expected future oil and gas sales. Derivative financial instruments are
also used to manage commodity price risk inherent in customer pricing requirements and to fix margins on the future sale of natural gas and
NGLs from the Company’s leased storage facilities. Interest rate swaps are used to fix or float interest rates attributable to the Company’s
existing or anticipated indebtedness.
In addition to derivative financial instruments, the Company may also enter into physical-delivery sales contracts to manage cash-flow
variability. These contracts call for the receipt or delivery of physical product at a specified location and price, which may be fixed or market-
based.
Settlements of any exchange-traded contracts are guaranteed by the New York Mercantile Exchange (NYMEX) or the Intercontinental
Exchange and are subject to nominal credit risk. Over-the-counter traded swaps, options and physical delivery contracts expose the Company
to credit risk to the extent the counterparty is unable to satisfy its settlement commitment. The Company monitors the creditworthiness of each
counterparty and assesses the impact, if any, on fair value. In addition, the Company routinely exercises its contractual right to net realized
gains against realized losses when settling with its swap and option counterparties.
Oil and Gas Activities At December 31, 2008 and 2007, the Company was party to derivative financial instruments in order to manage
commodity price risk associated with a portion of its expected future sales of its oil and gas production. Effective January 1, 2007, the
Company discontinued its application of hedge accounting. As a result of this change, both realized and unrealized gains and losses
associated with derivative financial instruments are currently recognized in gas sales and oil and condensate sales as they occur. During 2008,
unrealized gains of $892 million and realized losses of $306 million were recognized in natural gas, oil and NGLs sales. During 2007 and 2006,
unrealized gains (losses) of $(1,048) million and $837 million, respectively, and realized gains of $576 million and $294 million, respectively, were
recognized in natural gas, oil and NGLs sales.
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8. Derivative Instruments (Continued)
The fair value of all oil and gas related derivative instruments (excluding physical-delivery sales contracts) and the accumulated other
comprehensive income balance attributable to unrealized gains and losses on oil and gas derivative financial instruments previously
designated as cash flow hedges are as follows:
2008 2007
millions
Fair Value —
Current asset $513 $ 47
Current liability — (156)
Long-term asset 116 52
Long-term liability (10) (207)
Total $619 $(264)
Accumulated other comprehensive income (loss) before income taxes $ (22) $ (21)
Accumulated other comprehensive income (loss) after income taxes $ (14) $ (14)
Below is a summary of the Company’s financial derivative instruments related to its oil and gas production as of December 31, 2008. The
natural gas prices are NYMEX Henry Hub. The crude oil prices reflect a combination of NYMEX Cushing and London Brent Dated.
2009 2010 2011

Natural Gas
Three-Way Collars (thousand MMBtu/d) 530 — —
Average price per MMBtu
Ceiling sold price $11.25 $ — $ —
Floor purchased price $ 7.50 $ — $ —
Floor sold price $ 5.45 $ — $ —
Basis Swaps (thousand MMBtu/d) 1,200 465 45
Price per MMBtu $(0.85) $(1.16) $(1.74)
MMBtu— million British thermal units
MMBtu/d— million British thermal units per day
2009 2010 2011 2012

Crude Oil
Three-Way Collars (MBbls/d) 48 18 3 2
Average price per barrel
Ceiling sold price $87.04 $86.76 $86.00 $92.50
Floor purchased price $52.51 $49.19 $50.00 $50.00
Floor sold price $37.51 $34.18 $35.00 $35.00
MBbls/d— thousand barrels per day
A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The sold call establishes the maximum price
that the Company will receive for the contracted commodity volumes. The purchased put establishes the minimum price that the Company will
receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the minimum
price equals the reference price (i.e., NYMEX) plus the excess of the purchased put strike price over the sold put strike price.
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Marketing and Trading Activities Gains and losses attributable to the Company’s marketing and trading derivative instruments (both
physically and financially settled) are recognized currently in earnings. The marketing and trading gains and losses attributable to the
Company’s production are reported in gas sales, oil and condensate sales and NGLs sales. The marketing and trading gains and losses
attributable to third-party production are reported in gathering, processing and marketing sales. The fair values of these derivatives as of
December 31, 2008 and 2007 are as follows:
2008 2007
millions
Fair Value —
Current asset $ 62 $ 37
Current liability (14) (25)
Long-term asset 16 4
Long-term liability (16) (5)
Total $ 48 $ 11
Interest Rate Derivatives In anticipation of the refinancing of existing debt obligations, Anadarko entered into swaps to fix interest rates and
in doing so mitigated a portion of the risk it had to unfavorable interest rate changes prior to the future issuance of debt. In December 2008,
Anadarko entered into three-year forward-looking 10-year swap agreements with a combined notional value of $400 million, a three-year
forward-looking 30-year swap agreement with a notional value of $100 million, and four-year forward-looking 30-year swap agreements with a
combined notional value of $250 million whereby the Company will pay a fixed interest rate and receive a floating interest rate indexed to the
three-month LIBOR rate. Unrealized gains of $3 million on these swaps were recorded to other (income) expense in 2008. In January 2009,
Anadarko entered into three-year forward-looking 10-year swap agreements with a combined notional principal amount of $350 million, three-
year forward-looking 30-year swap agreements with a combined notional principal amount of $1.15 billion, four-year forward-looking 10-year
swap agreements with a combined notional principal amount of $250 million, and four-year forward-looking 30-year swap agreements with a
combined notional principal amount of $500 million whereby the Company will pay a fixed interest rate and receive a floating interest rate
indexed to the three-month LIBOR rate.
In January 2008, Anadarko entered into 18-month interest rate swaps with an aggregate notional principal amount of $1.0 billion whereby
the Company pays a fixed interest rate and receives a floating interest rate indexed to the three-month LIBOR rate. Unrealized and realized
losses of $10 million on these swaps were recorded to interest expense in 2008.
The Company’s open interest rate positions, as described above, are as follows:
Weighted-
Average
Start Maturity Interest
millions Date Date Rate
Notional Amount:
$1,000 Current September 2009 2.74%
$750 October 2011 October 2021 3.16%
$1,250 October 2011 October 2041 3.28%
$250 October 2012 October 2022 3.45%
$750 October 2012 October 2042 3.22%
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An interest rate swap entered into in March 2006 having an initial term of 25 years on a notional principal amount of $600 million was
settled in September 2007 at a cost of $10 million. At inception, this swap was designated for fair value hedge accounting. Effective January 1,
2007, hedge accounting was discontinued for this swap. The change in the fair value of the hedged debt from the date of inception of the swap
through December 31, 2006 was $8 million and is being amortized to interest expense over the remaining term of the debt. As of December 31,
2008, $7 million of this fair value remained to be amortized.
In anticipation of the debt financing associated with the August 2006 acquisitions, Anadarko entered into swap agreements to fix
interest rates, thereby mitigating the Company’s exposure to interest rate risk resulting from unfavorable changes in interest rates prior to the
Company’s issuance of debt. These swap transactions qualified for cash flow hedge accounting and were accounted for as such. Due to
interest rate movements during the hedge period, the Company realized a pretax loss of $211 million ($132 million after tax) upon the settlement
of the swap agreements, which occurred in September 2006 at the time of the Company’s debt issuance. This loss was recorded to
accumulated other comprehensive income, and is being amortized to interest expense over the term of the related debt. At December 31, 2008,
the unamortized balance of the accumulated other comprehensive loss was $163 million pretax, and $104 million after tax. At December 31, 2007,
the unamortized balance of the accumulated other comprehensive loss was $187 million pretax, and $119 million after tax.
Fair Value The fair value of commodity futures contracts are based on inputs that are quoted prices in active markets for identical assets or
liabilities, thus resulting in Level 1 categorization of such measurements. The valuation of physical delivery purchase and sale agreements,
over-the-counter financial swaps and three-way collars are based on similar transactions observable in active markets or industry standard
models that primarily rely on market observable inputs. Substantially all of the assumptions for industry standard models are observable in
active markets throughout the full term of the instrument. The Company categorizes these measurements as Level 2.
The following table sets forth, by level within the hierarchy, the fair value of the Company’s financial assets and liabilities at December
31, 2008 that are measured at fair value each reporting period.
Netting and
millions Level 1 Level 2 Level 3 Collateral(1) Total
Assets:
Commodity derivatives $ 34 $ 831 $ — $ (161) $ 704
Interest rate derivatives — 3 — — 3
Total $ 34 $ 834 $ — $ (161) $ 707
Liabilities:
Commodity derivatives $ (13) $ (186) $ — $ 158 $ (41)
Interest rate derivatives — (10) — — (10)
Total $ (13) $ (196) $ — $ 158 $ (51)
(1)
Represents the impact of netting assets, liabilities and collateral with counterparties with which the right of setoff exists. Cash collateral
held by counterparties was $10 million at December 31, 2008. Cash collateral held by Anadarko was $3 million at December 31, 2008.
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The following table reconciles changes in the fair value of the net derivative assets (liabilities) classified as Level 3 in the fair value
hierarchy.
millions 2008
Beginning balance as of January 1 $ (291)
Realized and unrealized gains (losses) (874)
Purchases, issuances and settlements 38
Transfers in and/or out of Level 3 1,127
Ending balance as of December 31 $ —
Transfers out of Level 3 resulted from the Company’s second-quarter 2008 implementation of a marketing system which utilizes
observable market data or interpolates valuations using observable market data for all significant inputs.
9. Asset Retirement Obligations
The majority of Anadarko’s asset retirement obligations relate to the plugging and abandonment of oil and gas properties. The following
table provides a rollforward of the asset retirement obligations. Liabilities settled include, among other things, asset retirement obligations that
were assumed by the purchasers of divested properties. Revisions to estimated liabilities during the period relate primarily to changes in
estimates of asset retirement costs and include, among other things, revisions of estimated inflation rates, changes in property lives and the
expected timing of settling asset retirement obligations.
2008 2007
millions
Carrying amount of asset retirement obligations at beginning of year $1,101 $1,050
Liabilities incurred 84 51
Liabilities settled (84) (170)
Accretion expense 70 61
Revisions in estimated liabilities 197 109
Carrying amount of asset retirement obligations at end of year $1,368 $1,101
At December 31, 2008 and 2007, long-term asset retirement obligations of $1,351 million and $1,058 million, respectively, were included in
other long-term liabilities.
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10. Debt and Interest Expense
December 31,
2008 2007
Principal Carrying Value Principal Carrying Value
millions
Acquisition Facility $ — $ — $ 1,000 $ 1,000
3.25% Notes due 2008 — — 350 350
6.75% Notes due 2008 — — 47 46
7.30% Notes due 2009 52 52 52 52
Floating Rate Notes due 2009 1,420 1,420 2,000 2,000
6.75% Notes due 2011 950 934 950 927
6.875% Notes due 2011 675 695 675 702
6.125% Notes due 2012 170 169 170 169
5.00% Notes due 2012 82 82 82 82
5.95% Notes due 2016 1,750 1,744 1,750 1,743
7.05% Debentures due 2018 114 108 114 107
6.95% Notes due 2024 650 674 650 675
7.50% Debenture due 2026 112 106 112 106
7.00% Debentures due 2027 54 54 54 54
7.125% Debentures due 2027 150 157 150 157
6.625% Debentures due 2028 17 17 17 17
7.15% Debentures due 2028 235 215 235 214
7.20% Debentures due 2029 135 135 135 135
7.95% Debentures due 2029 117 116 117 116
7.50% Notes due 2031 900 856 900 855
7.875% Notes due 2031 500 581 500 583
Zero Coupon Notes due 2036 2,360 561 2,360 533
6.45% Notes due 2036 1,750 1,742 1,750 1,742
7.73% Debentures due 2096 61 61 61 61
7.50% Debentures due 2096 78 72 78 72
7.25% Debentures due 2096 49 49 49 49
Midstream Subsidiary Note Payable to a Related Party due
2012 1,739 1,739 2,200 2,200
Total debt 14,120 12,339 16,558 14,747
Less:
Current maturities 1,472 1,472 1,397 1,396
Total long-term debt $ 12,648 $ 10,867 $ 15,161 $ 13,351
Except for Anadarko’s Midstream Subsidiary Note Payable to a Related Party (see following discussion), none of the Company’s notes,
debentures or credit agreements contain credit-rating triggers that result in accelerating debt maturity. All of the Company’s debt is senior
unsecured debt; therefore, all debt has equal priority with respect to the payment of principal and interest.
The net unamortized debt discount, represented in the table above, of $1.8 billion as of December 31, 2008 and 2007 is being amortized to
interest expense over the terms of the related debt. See Note 6 for Anadarko’s notes payable to certain investees that do not affect the
reported debt balance.
Current and Long-term Debt — non-affiliates During 2008, the Company retired for cash an aggregate principal amount of $2.4 billion of debt
that was outstanding as of December 31, 2007. As of December 31, 2007, current
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10. Debt and Interest Expense (Continued)
debt included $1 billion under a variable-rate 354-day facility. This facility was fully repaid and concurrently retired in February 2008.
During 2008, the Company retired $580 million aggregate principal amount of Floating Rate Notes due 2009 and recognized a gain of $15
million, which is included in interest expense. The Floating Rate Notes due 2009 had an average interest rate of approximately 2.40% and 5.39%
at December 31, 2008 and 2007, respectively.
In October 2006, the Company received $500 million of proceeds from a private offering of Zero Coupon Senior Notes due 2036 with an
aggregate principal amount at maturity of $2.4 billion. The Company initially recorded the note in long-term debt at the proceeds amount. The
carrying amount as of December 31, 2008 includes an increase of $28 million, $28 million and $5 million related to accretion expense recognized
in 2008, 2007 and 2006, respectively. The notes were issued with a yield to maturity of 5.24%, and the holder has an option to put the notes
back to the Company annually, starting in 2010, at the accreted value, which approximates carrying value.
Midstream Subsidiary Note Payable to a Related Party In December 2007, Anadarko and the Investor formed Trinity, with initial
capitalization totaling $2.3 billion. Note 6 provides additional information about Anadarko’s interest in Trinity. Trinity extended a $2.2 billion
loan to a wholly-owned subsidiary of Anadarko, referred to herein as Midstream Holding, which holds and operates substantially all of
Anadarko’s midstream assets, directly and through its subsidiaries. The Company used all of the loan proceeds received by Midstream
Holding to repay a portion of the Company’s acquisition facility indebtedness.
The principal balance owed by Midstream Holding to Trinity is reflected in the accompanying consolidated balance sheet as Midstream
Subsidiary Note Payable to a Related Party. The loan has an initial maturity date of December 27, 2012, subject to renewals for additional five-
year periods on market terms at the time of renewal. Interest on the loan is based on three-month LIBOR plus a margin. The rate in effect at the
beginning of 2009 is 2.51%.
Midstream Holding may repay the loan in whole or in part at any time prior to maturity. In December 2008, Anadarko provided a parental
guaranty for the payment of principal and interest on the remaining balance of the Midstream Subsidiary Note Payable to a Related Party in
exchange for the removal of various covenants in the loan agreement, including a ceiling on the maximum ratio of debt to earnings before
interest, taxes, depreciation and amortization as defined in the loan agreement. Midstream Holding was in compliance with all previously
existing covenants as of the date the Anadarko parental guaranty was provided. The amended loan agreement requires customary
representations and warranties and affirmative and negative covenants, and includes the same financial covenants as the Revolving Credit
Agreement (RCA) discussed below. The Midstream Subsidiary Note Payable to a Related Party has the same priority with respect to the
payment of principal and interest as Anadarko’s other debt.
Following a sale or transfer of assets to third parties or other entities within the Anadarko consolidated group, Midstream Holding
and/or its subsidiaries will be required to repay a portion of the loan principal. Further, maturity of the loan could be accelerated if Anadarko’s
senior unsecured credit rating were to be rated below “BB-” by Standard and Poor’s (S&P) or “Ba3” by Moody’s Investors Service
(Moody’s). As of December 31, 2008, the Company was in compliance with all covenants, and S&P and Moody’s rated the Company’s debt at
“BBB-” and “Baa3”, respectively.
Revolving Credit Agreement In March 2008, the Company entered into a $1.3 billion, five-year RCA with a syndicate of United States and
foreign lenders. Under the terms of the RCA, the Company can, under certain conditions, request an increase in the borrowing capacity under
the RCA up to a total available credit amount of $2.0 billion. The RCA has a maximum 65% debt to total book capitalization covenant
(excluding non-cash
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10. Debt and Interest Expense (Continued)
charges). The RCA terminates in March 2013. The RCA replaced a $750 million revolving credit facility which was scheduled to mature in 2009
and was retired. As of December 31, 2008, the Company had no outstanding borrowings under the RCA. Anadarko was in compliance with
existing covenants and the full amount of the RCA was available for borrowing at December 31, 2008.
Scheduled Maturities Total maturities related to debt for the five years ending December 31, 2013 are shown below.
millions
2009 $1,472
2010 —
2011 1,625
2012 1,990
2013 —
Fair Value The fair value of debt at December 31, 2008 and 2007 was $11.3 billion and $15.2 billion, respectively, and is the estimated amount
the Company would have to pay to repurchase the debt, including any premium or discount to the debt holder for the differential between
stated interest rate and year-end market rate. The fair values are based on quoted market prices and, where such quotes were unavailable, on
the average valuation in effect at year-end of similar debt instruments.
Interest Expense The following table summarizes the amounts included in interest expense.
2008 2007 2006

millions
Interest Expense
Gross interest expense—
Current debt, long-term debt and other $ 756 $1,212 $730
Midstream subsidiary note payable to a related party 109 2 —
Capitalized interest* (123) (122) (80)
Net interest expense $ 742 $1,092 $650
* Included in 2008 is additional capitalized interest related to a prior period of $16 million.
See Note 6 for interest expense incurred on certain notes payable to unconsolidated affiliates which is reported in other (income)
expense.
11. Stockholders’ Equity
Common Stock In May 2006, the Company’s shareholders approved an increase in authorized shares so Anadarko could complete a two-for-
one stock split to be implemented in the form of a stock dividend. The distribution date was May 26, 2006 to stockholders of record on May 12,
2006. In addition, the Company’s Board of Directors approved the retirement of the Company’s existing treasury stock prior to the stock split
distribution date. The book value of the treasury shares was allocated to common stock, paid-in capital and
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11. Stockholders’ Equity (Continued)
retained earnings at the time of retirement. Except for the presentation of common shares authorized and issued on the consolidated balance
sheet and shares presented in the table below, all share and per share information has been revised to give retroactive effect to the stock split.
In August 2008, the Company announced a $5 billion share-repurchase program under which shares may be repurchased either in the
open market or through privately negotiated transactions. The program is authorized to extend through August 2011 and replaces the $1
billion stock buyback program authorized in 2005. The repurchase program does not obligate Anadarko to acquire any specific number of
shares and may be discontinued at any time. During 2008 and 2006, Anadarko purchased 10.0 million and 2.5 million shares of common stock
for $600 million and $118 million, respectively, under these programs through purchases in the open market and under share-repurchase
agreements. During 2007, no shares were repurchased under the program in effect at that time.
The changes in the Company’s shares of common stock are as follows:
2008 2007 2006

millions
Shares of common stock issued
Beginning of year 469 463 264
Exercise of stock options 1 4 3
Issuance of restricted stock 2 2 2
Retirement of treasury stock — — (36)
Two-for-one stock split — — 230
End of year 472 469 463
Shares of common stock held in treasury
Beginning of year 1 — 34
Purchase of treasury stock 10 — 1
Shares received for restricted stock vested and options exercised 1 1 1
Retirement of treasury stock — — (36)
End of year 12 1 —
Shares of common stock outstanding at end of year 460 468 463
The number of shares of common stock issued and outstanding presented in the table above excludes 4 million shares held by the
Anadarko Petroleum Corporation Executives and Directors Benefits Trust, a grantor trust associated with the Company’s obligations under
certain of its pension and deferred compensation plans.
For all periods presented, quarterly dividends of nine cents per share were paid to holders of common stock. As of December 31, 2008,
the covenants in certain of the Company’s agreements provided for a maximum capitalization ratio of 65% debt. Although these covenants do
not specifically restrict the payment of dividends, the impact of dividends paid on the Company’s debt to total capitalization ratio must be
considered prior to the payment of dividends in order to ensure the maximum debt to total capitalization ratio is not exceeded. Based on these
covenants, as of December 31, 2008, retained earnings of approximately $12.3 billion were not limited as to the payment of dividends.
Under the Anadarko Stockholders Rights Plan, rights were attached automatically to each outstanding share of common stock in 1998.
Each right entitled stockholders to purchase from the Company 1/1000th of a share of a new series of junior participating preferred stock at an
exercise price of $175 in the event a person or group acquired 15% or more of Anadarko common stock or announced a tender offer or
exchange offer, the
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11. Stockholders’ Equity (Continued)
consummation of which would result in ownership by a person or group of 15% or more of Anadarko common stock. The rights expired in
November 2008.
The reconciliation between basic and diluted EPS from continuing operations is as follows:
For th e Ye ar En de d For the Year Ended For the Year Ended

De ce m be r 31, 2008 December 31, 2007 December 31, 2006
Pe r S h are P er Share P er Share
Incom e S h are s Am ou n t Income Shares Amount Income Shares Amount
m illions except per share am ounts
Basic EPS
Income from continuing operations $ 3,198 $ 3,770 $ 2,474
P referred stock dividends 1 3 3
Income from continuing operations available to
common stockholders $ 3,197 465 $ 6.87 $ 3,767 465 $ 8.09 $ 2,471 460 $ 5.37
Dilu te d EPS
Effect of dilutive stock options, restricted stock and
performance-based stock awards — 3 — 3 — 4
Income from continuing operations available to
common stockholders $ 3,197 468 $ 6.84 $ 3,767 468 $ 8.05 $ 2,471 464 $ 5.33
For the years ended December 31, 2008, 2007 and 2006, awards for 2.9 million, 2.5 million and 1.8 million average shares, respectively, of
common stock were excluded from the diluted EPS calculation because their inclusion would have been anti-dilutive.
See Note 12 for information related to common stock issued under stock-based compensation plans.
Preferred Stock In the second quarter of 2008, Anadarko redeemed and subsequently retired its 5.46% Series B Cumulative Preferred Stock
issued in the form of 0.5 million Depositary Shares for $45 million. Each Depositary Share represented 1/10th of a share of 5.46% Series B
Cumulative Preferred Stock. Holders of the shares were entitled to receive, when, and as declared by the Board of Directors, cumulative cash
dividends at an annual dividend rate of $5.46 per Depositary Share.
Anadarko repurchased $1 million and $43 million of preferred stock during 2007 and 2006, respectively. Dividends of $27.30 per share for
2008 and $54.60 per share for 2007 and 2006 (equivalent to $2.73 and $5.46, respectively, per Depositary Share) were paid to holders of
preferred stock.
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12. Stock-Based Compensation
Activities and balances presented include amounts associated with discontinued operations. All share and per share information
presented has been revised to give retroactive effect to the May 2006 two-for-one stock split that was implemented in the form of a stock
dividend. See Note 11.
The Company generally issues new shares to satisfy employee share-based payment plans. At December 31, 2008, 32 million shares of
the 35 million shares of Anadarko common stock originally authorized for awards under the active share-based compensation plans remain
available for future issuance. The number of shares available is reduced by awards granted. A summary of stock-based compensation cost is
presented below:
2008 2007 2006

millions
Compensation cost:
Restricted stock $131 $115 $ 53
Value Creation Plan and other 43 55 26
Total compensation cost, pretax 174 170 79
Income tax benefit 63 62 26
For 2008, 2007 and 2006, $9 million, $23 million and $36 million, respectively, in excess tax benefits were included in cash flow from
financing activities. Cash received from stock option exercises for 2008, 2007 and 2006 was $14 million, $89 million and $91 million, respectively.
Equity Classified Awards
Stock Options Certain employees may be granted options to purchase shares of Anadarko common stock under the 2008 Omnibus Incentive
Compensation Plan (Omnibus Plan). Stock options are granted with an exercise price equal to, or greater than, the fair market value of
Anadarko common stock on the date of grant and have a maximum term of seven years from the date of grant. Stock options vest over service
periods ranging from three to four years. Prior to May 2008, employees were granted options under the 1999 Stock Incentive Plan (1999 Plan).
Some of the option grants made prior to the termination of the 1999 Plan are still outstanding. Outstanding grants will terminate at the earlier of
seven years from the date of grant or the date of exercise.
Nonemployee directors may be granted nonqualified stock options under the 2008 Director Compensation Plan (Director Plan). Stock
options are granted with an exercise price equal to the fair market value of Anadarko common stock on the date of grant and have a maximum
term of ten years from the date of grant. Stock options vest over a one year service period from the date of grant. Prior to May 2008,
nonemployee directors were granted options under the 1998 Director Stock Plan (1998 Plan). Some of the option grants made prior to the
termination of the 1998 Plan are still outstanding. Outstanding grants will terminate at the earlier of ten years from the date of grant or the date
of exercise.
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12. Stock-Based Compensation (Continued)
The fair value of stock option awards is determined using the Black-Scholes option pricing model. The expected life of the option is
estimated based upon historical exercise behavior. The expected forfeiture rate was estimated based upon historical forfeiture experience. The
volatility assumption was estimated based upon expectations of volatility over the life of the option as measured by historical and implied
volatility. The risk-free interest rate was based on the U.S. Treasury rate for a term commensurate with the expected life of the option. The
dividend yield was based upon a 12-month average dividend yield. The Company used the following weighted-average assumptions to
estimate the fair value of stock options granted during 2008, 2007 and 2006.
2008 2007 2006

Expected option life — years 4.9 5.0 5.0
Volatility 37.3% 28.9% 29.8%
Risk-free interest rate 2.5% 4.4% 4.4%
Dividend yield 0.6% 0.8% 0.8%
A summary of stock option activity for the year ended December 31, 2008 is presented below:
Weighted-
Average
Weighted- Remaining Aggregate
Average Contractual Intrinsic
Shares Exercise Term Value
(millions) Price (years) (millions)
Outstanding at January 1, 2008 4.73 $ 42.42
Granted 2.14 $ 41.60
Exercised (0.41) $ 33.84
Forfeited or expired (0.07) $ 52.92
Outstanding at December 31, 2008 6.39 $ 42.59 5.2 $ 22
Vested or expected to vest at December 31, 2008 6.27 $ 42.51 5.2 $ 22
Exercisable at December 31, 2008 2.98 $ 38.88 4.0 $ 17
The weighted-average grant-date fair value of stock options granted during 2008, 2007 and 2006 was $13.93, $16.51 and $15.44,
respectively, using the Black-Scholes option pricing model. The total intrinsic value of stock options exercised during 2008, 2007 and 2006 was
$12 million, $79 million and $107 million, respectively, based on the difference between the market price at the exercise date and the option
price. As of December 31, 2008, there was $42 million of total unrecognized compensation cost related to stock options, which is expected to be
recognized over a weighted-average period of 2.2 years.
Restricted Stock Certain employees may be granted restricted stock in the form of restricted stock awards or restricted stock units under the
Omnibus Plan. Restricted stock is subject to forfeiture restrictions and cannot be sold, transferred or disposed of during the restriction period.
The holders of restricted stock awards have the same rights as a stockholder of the Company with respect to such shares, including the right
to vote and receive dividends or other distributions paid with respect to the shares. A restricted stock unit is equivalent to a restricted stock
award with the exception that unit holders receive cash dividend equivalents during the restriction period and do not have the right to vote the
units. Restricted stock vests over service periods ranging from the date of grant up to four years. Restricted stock is not considered issued
and outstanding until it vests. Prior to May 2008, employees were granted restricted stock under the 1999 Plan.
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Nonemployee directors are granted deferred shares under the Director Plan. These deferred shares are held in trust by the Company, and
they become payable when the director retires from the Board of Directors. Prior to May 2008, nonemployee directors were granted deferred
shares under the 1998 Plan.
A summary of restricted stock activity for the year ended December 31, 2008 is presented below:
Weighted-Average
Shares Grant-Date
(millions) Fair Value
Nonvested at January 1, 2008 4.70 $ 50.17
Granted 2.41 $ 61.20
Vested (2.16) $ 49.21
Forfeited (0.19) $ 54.43
Nonvested at December 31, 2008 4.76 $ 56.01
The weighted-average grant-date fair value of restricted stock granted during 2007 and 2006 was $52.53 and $48.88, respectively. The
total fair value of restricted shares vested during 2008, 2007 and 2006 was $110 million, $119 million and $84 million, respectively, based on the
market price at the vesting date. As of December 31, 2008, there was $202 million of total unrecognized compensation cost related to restricted
stock, which is expected to be recognized over a weighted-average period of 1.8 years.
Performance-Based Share Awards Key officers of the Company were provided Performance Unit Agreements with three-year terms ending in
2007, 2008 and 2009 under the 1999 Plan. These agreements provided for the issuance of up to a maximum of 200,400 shares of Anadarko
common stock after a three-year performance period that ended in 2007, a maximum of 506,000 shares of Anadarko common stock after a three-
year performance period ending in 2008 and a maximum of 358,200 shares of Anadarko common stock after a three-year performance period
ending in 2009. The number of shares to be issued was determined based on a market objective and a performance objective with both
objectives equally weighted. The number of shares to be issued with respect to the market objective was determined by comparing the
Company’s total shareholder return to the total shareholder return of a predetermined group of peer companies over the performance period.
The number of shares to be issued with respect to the performance objective was determined based on the Company’s return on capital over
the performance period. The fair value per share for the performance conditions is $31.54, $47.14 and $49.86 for the agreements related to the
three-year periods ending 2007, 2008 and 2009, respectively. No shares were awarded to current key officers for the performance period that
ended in 2007. During 2007 and 2006, 24,700 shares and 73,200 shares, respectively, were issued under these agreements with a fair value of $1
million and $3 million, respectively, to certain key officers upon termination of their employment with the Company.
In November 2007, the Company cancelled, without value and subject to approval by the key officers, the two outstanding Performance
Unit Agreements that had performance periods ending in 2008 and 2009. All key officers agreed to the cancellation of these agreements which
provided for the issuance of up to 712,000 shares based on performance.
In November 2007, two new Performance Unit Agreements were awarded to key officers. The number of shares awarded under these
agreements is based solely on a comparison of the Company’s total shareholder return to the total shareholder return of a predetermined
group of peer companies over performance periods ranging from one to three years. The first new award, the transitional award, provides for a
performance period commencing in 2008 and for the issuance of up to a maximum of 184,512 shares of Anadarko common stock after a one-
year performance period ending in 2008, and a maximum of 184,512 shares of Anadarko common
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stock after a two-year performance period ending in 2009. This transitional award resulted in incremental compensation cost of $7 million
attributable to the modification of the awards which will be recognized along with the cost of the original award over the life of the new award.
The second new award provides for a performance period beginning in 2008 and for the issuance of up to a maximum of 282,700 shares of
Anadarko common stock after a two-year performance period ending in 2009 and a maximum of 282,700 shares of Anadarko common stock
after a three-year performance period ending in 2010. No shares were awarded to current key officers for the performance period that ended in
2008. During 2008, 11,862 shares were issued under these agreements with a fair value of $0.9 million to a key officer upon termination of
employment with the Company.
Anadarko and a key officer of the Company entered into a Performance Unit Agreement under the 1999 Plan. The agreement provided for
issuance of up to 160,000 shares of Anadarko common stock after a two-year performance period that ended in 2005 and a four-year
performance period that ended in 2007. The number of shares to be issued was determined by comparing the Company’s total shareholder
return to the total shareholder return of a predetermined group of peer companies. During 2008, no shares were issued for the performance
period that ended in 2007. During 2006, 28,800 shares were issued for the performance period that ended in 2005 with a fair value of $2 million.
As of December 31, 2008, there was $14 million of total estimated unrecognized compensation cost related to performance-based share
awards, which is expected to be recognized over a weighted-average period of 1.4 years.
Liability Classified Awards
Value Creation Plan The Company has adopted a cash incentive program that provides employees the opportunity to earn cash bonus
awards based on the Company’s total shareholder return for the year compared to the total shareholder return of a predetermined group of
peer companies. As of December 31, 2008, there was no liability for the 2008 performance period.
Performance-Based Unit Awards In November 2008, key officers of the Company were provided Performance Unit Agreements with a two-
year performance period ending in 2010 and a three-year performance period ending in 2011 under the Omnibus Plan. The vesting of these
units is based solely on comparing the Company’s total shareholder return to the total shareholder return of a predetermined group of peer
companies over the specified performance period. Each performance unit represents the value of one share of the Company’s common stock.
At the end of each performance period, the value of the vested performance units, if any, will be paid in cash. As of December 31, 2008, the
liability under performance-based unit awards was $1 million, and there was $17 million of total estimated unrecognized compensation cost
related to these awards, which is expected to be recognized over a weighted-average period of 2.5 years.
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13. Commitments
Leases The Company has $3.9 billion in long-term drilling rig commitments that satisfy operating lease criteria. The Company also has
various commitments under noncancelable operating lease agreements of $0.9 billion for production platforms and equipment, buildings,
facilities and aircraft. These operating leases expire at various dates through 2024. Certain of these operating leases contain residual value
guarantees at the end of the lease term; however, at December 31, 2008, no material liabilities were accrued for these guarantees. At
December 31, 2008, future minimum lease payments under existing operating leases are as follows:
Operating
Leases
millions
2009 $ 1,193
2010 1,095
2011 938
2012 781
2013 382
Later years 369
Total future minimum lease payments $ 4,758
Total rent expense, net of sublease income, amounted to $226 million in 2008, $229 million in 2007 and $125 million in 2006. Total rent
expense includes contingent rent expense related to processing fees of $32 million, $6 million and $14 million in 2008, 2007 and 2006,
respectively.
Drilling Rig Commitments Anadarko has entered into various agreements to secure a portion of the drilling rigs necessary to execute its
drilling plans over the next several years. The table of future minimum lease payments above includes approximately $3.4 billion related to six
offshore drilling vessels and $420 million related to certain contracts for onshore United States drilling rigs. In February 2008, the Company
extended the term of one of its drilling rig contracts, resulting in an additional $586 million of minimum lease payments for the years 2010
through 2013 that are included in the above table. The portion of these lease payments associated with exploratory wells and development
wells, net of amounts billed to partners, will initially be capitalized as a component of oil and gas properties, and either depreciated in future
periods or written off as exploration expense.
Production Platforms During 2004, Anadarko and a group of energy companies (Atwater Valley Producers Group) executed agreements with
third parties for the dedication, processing and gathering of natural gas and condensate production from several natural gas fields in the
deepwater Gulf of Mexico. Third parties constructed and own Independence Hub, a semi-submersible platform in the deepwater Gulf of
Mexico. Anadarko became operator of the platform structure upon mechanical completion in 2007. First production from Anadarko’s
discoveries to be processed on the facility began in 2007.
The Company is also a party to an agreement under which a floating production platform for its Marco Polo discovery in the deepwater
Gulf of Mexico was installed in 2004. The other party to the agreement constructed and owns the platform and production facilities that upon
mechanical completion became operated by Anadarko. The agreement provides that Anadarko dedicate its production from Green Canyon
Block 608 and 11 other Green Canyon blocks to the production facilities.
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13. Commitments (Continued)
The table of future minimum lease payments above includes $105 million related to the monthly demand charges due under the above-
described agreements. The agreements do not contain any purchase options, purchase obligations or value guarantees.
Spar Platform and Production Vessel Leases Anadarko has operating leases related to certain spar platforms in the Gulf of Mexico and a
floating production, storage and offloading vessel in China. The table of future minimum lease payments above includes approximately $482
million for these agreements. These agreements also contain residual value guarantees totaling $37 million at the end of the lease periods.
Buildings The table of future minimum lease payments above includes the Company’s lease payment obligations of $113 million related to
office building leases. The Company leases two corporate office buildings located in The Woodlands, Texas and another corporate office
building located in Denver, Colorado. The lease term on the office buildings located in The Woodlands, Texas is seven years and contains
various covenants including covenants regarding the Company’s financial condition. Default under the lease, including violation of these
covenants, could require the Company to purchase the facilities for a specified amount, which approximates the lessor’s original cost of $214
million. As of December 31, 2008, the Company was in compliance with these covenants. The Company has provided a residual value
guarantee for any deficiency of up to $187 million if the properties are sold for less than the lease balance. Currently, management does not
believe it is probable that the fair market value of the properties will be less than the lease balance at the end of the lease term. As of December
31, 2008, the carrying amount of the residual value guarantee was not material.
Aircraft The table of future minimum lease payments above includes the Company’s lease payment obligations of $23 million related to aircraft
leases. Some of these leases provide for a residual value guarantee for any deficiency resulting from a sale of aircraft for less than the sale
option amount (approximately $33 million in the aggregate). In addition, the Company is entitled to any proceeds from a sale of an aircraft in
excess of the sale option amount.
Other Equipment Leases Included in the table of future minimum lease payments above are lease payments of approximately $112 million
related to equipment associated with various gas gathering and processing systems. In the event the Company does not purchase the
equipment at the end of the leases, the Company may be required to make payments in connection with residual value guarantees for a total of
up to $36 million.
Other Commitments In the normal course of business, the Company enters into other contractual agreements to purchase natural gas or
crude oil, pipeline capacity, storage capacity, utilities and other services. Aggregate future payments under these contracts total $2.1 billion, of
which $639 million is expected to be paid in 2009, $458 million in 2010, $274 million in 2011, $230 million in 2012, $146 million in 2013 and $369
million thereafter.
Sale of Future Hard Minerals Royalty Revenues In 2004, the Company conveyed a limited-term non-participating royalty interest, which was
carved out of the Company’s existing royalty interests, that entitles a third party to receive future coal and trona royalty revenue over an 11-
year period. Additionally, the third party is entitled to receive 5% of the aggregate royalties earned during the first ten years of the agreement
that exceed $400 million. The specified cumulative future amount that the third-party investor expects to receive, prior to the 5% of any excess
royalties described above, is $123 million. This amount and the payment timing are subject to change based upon the actual royalties received
by the Company during the term of the agreement. The third party relies solely on royalty payments to recover its investment; therefore, the
third party bears the risk associated with the royalties being insufficient to recover the original investment over the term of the agreement.
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13. Commitments (Continued)
Proceeds from this transaction were accounted for as deferred revenues and classified as liabilities on the balance sheet. The deferred
revenues are amortized to other sales on a unit-of-revenue basis over the term of the agreement. For each of the years 2008, 2007 and 2006, the
Company amortized $16 million of deferred revenues to other sales revenues related to this agreement.
14. Contingencies
General Litigation charges of $112 million, $56 million and $16 million were expensed during 2008, 2007 and 2006, respectively. The Company
is a defendant in a number of lawsuits and is involved in governmental proceedings arising in the ordinary course of business, including, but
not limited to, royalty claims, contract claims and environmental claims. The Company has also been named as a defendant in various personal
injury claims, including claims by employees of third-party contractors alleging exposure to asbestos, silica and benzene while working at
refineries (previously owned by predecessors of acquired companies) located in Texas, California and Oklahoma. While the ultimate outcome
and impact on the Company cannot be predicted with certainty, management believes that the resolution of these proceedings will not have a
material adverse effect on the consolidated financial position, results of operations or cash flow of the Company.
Litigation The Company is subject to various claims from its royalty owners in the regular course of business as an oil and gas producer,
including disputes regarding measurement, costs and expenses beyond the wellhead and basis for royalty valuations. The Company was
named as a defendant in a case styled U.S. of America ex rel. Harold E. Wright v. AGIP Company, et al. filed in September 2000 in the U.S.
District Court for the Eastern District of Texas, Lufkin Division. Kerr-McGee was also named as a defendant in this legal proceeding. This
lawsuit generally alleges that the Company, including Kerr-McGee, and 117 other defendants undervalued natural gas in connection with a
payment of royalties on production from federal and Indian lands. Based on the Company’s present understanding of these various
governmental and False Claims Act proceedings, the Company believes that it has substantial defenses to these claims and intends to
vigorously assert such defenses. However, if the Company is found to have violated the False Claims Act, the Company could be subject to a
variety of sanctions, including treble damages and substantial monetary fines. The discovery process is ongoing. The court has entered an
order whereby the case will be tried in phases. The claims against the Company have yet to be set for trial. Prior to its acquisition by
Anadarko, Kerr-McGee reached a settlement with the government; however, the court has permitted Mr. Wright to conduct additional
discovery to test the reasonableness of the settlement. Discovery is currently underway. Management has accrued a liability for only the
settlement amount. The Company believes that an additional loss, if any, is unlikely to have a material adverse effect on Anadarko’s financial
position, results of operations or cash flows.
The Company was named as a defendant in a class action lawsuit styled Ivan J. Simmons, Madaline M. Thompson and Gaylon Lee
Mitchusson v. Anadarko Petroleum Corporation, which was filed in February 2004 and is pending in the District Court in Caddo County,
Oklahoma. In January 2008, the District Judge certified a statewide class of royalty interest owners. The parties have executed a settlement
agreement which was approved by the presiding judge in December 2008. Under the terms of the settlement agreement, Anadarko paid $155
million to resolve all claims and obtain a broad form release.
Deepwater Royalty Relief Act In 1995, the United States Congress passed the Deepwater Royalty Relief Act (DWRRA) to stimulate
exploration and production of oil and natural gas by providing relief from the obligation to pay royalty on certain federal leases located in the
deep waters of the Gulf of Mexico. After the passage of the DWRRA, the Minerals Management Service (MMS), an agency of the Department
of the Interior (DOI), inserted price thresholds into leases issued in 1996, 1997 and 2000 that effectively eliminated this royalty relief if these
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14. Contingencies (Continued)
price thresholds were exceeded. The 1998 and 1999 leases did not contain price threshold provisions. The Company currently owns interests
in several deepwater Gulf of Mexico leases granted during the 1996-2000 time period (some originally owned by Kerr-McGee). In January 2006,
the DOI issued an order (the 2006 Order) to Kerr-McGee Oil and Gas Corporation (KMOG), a subsidiary of Kerr-McGee, to pay oil and gas
royalties and accrued interest on KMOG’s deepwater Gulf of Mexico production associated with eight 1996, 1997 and 2000 leases, for which
KMOG believes royalties are suspended under the DWRRA. The 2006 Order is based on the assertion that the DOI has the discretion to
eliminate royalty relief under the DWRRA when oil and gas prices exceed certain levels specified by DOI. KMOG believes that the DOI does
not have the discretion to eliminate royalty relief on the DWRRA leases issued 1996 through 2000 and accordingly, is contesting the 2006
Order. In that regard, on March 17, 2006, KMOG filed a lawsuit styled Kerr-McGee Oil and Gas Corp. v. C. Stephen Allred, Assistant
Secretary for Land & Minerals Mgt. and the Dept of the Interior (Kerr-McGee v Allred) in the U.S. District Court for the Western District of
Louisiana against the DOI for injunctive and declaratory relief with respect to the DOI’s claims for additional royalties on the eight leases
listed in the 2006 Order. KMOG and the DOI unsuccessfully mediated the dispute.
In May 2007, KMOG filed a motion for summary judgment, and in October 2007 the District Court for the Western District of Louisiana
ruled in favor of KMOG on the eight leases before the court. The DOI appealed the decision to the U.S. Court of Appeals for the Fifth Circuit
(Fifth Circuit). In January 2009, a three judge Fifth Circuit panel unanimously affirmed the District Court’s ruling in favor of KMOG. The DOI
has until late March 2009 to file for a rehearing by the Fifth Circuit.
During September 2008, the MMS issued to Anadarko another order (the 2008 Order) to perform restructured accounting and pay
royalties covering 17 deepwater leases, including seven leases covered by the 2006 Order. The DOI, relying upon its position that it has the
discretion to eliminate royalty relief under the DWRRA through price thresholds, is seeking payment for alleged “past due” oil and gas
royalties for years 2003 (gas only) and 2004 through 2007 plus interest. Generally, the 2008 Order covers time periods not included in the 2006
Order. In October 2008, Anadarko filed an administrative appeal of the 2008 Order with the MMS and requested approval from the MMS to
self-bond. The 2008 Order is stayed pending the final non-appealable judgment of Kerr-McGee v Allred.
The Company has accrued a liability of approximately $600 million, which, as of December 31, 2008, is equal to the royalties (plus accrued
interest) that could be owed on the leases listed in the 2006 Order and the 2008 Order and other 1996, 1997 and 2000 leases granted to the
Company in the Gulf of Mexico that contain similar price threshold provisions as the leases currently in dispute under the 2006 Order and the
2008 Order. The liability will continue to be adjusted monthly as production is sold and sales prices are confirmed, until the resolution of the
matter is final. Under the applicable statutes, regulations and lease terms attributable to the 1998 and 1999 leases, no royalties are owed on
production from these leases until the applicable royalty suspension volumes are exhausted; accordingly, no amounts have been accrued for
potential royalty payments under those leases.
Guarantees and Indemnifications Under the terms of the Master Separation Agreement entered into between Kerr-McGee and Tronox
Incorporated (Tronox), a former wholly-owned subsidiary that held Kerr-McGee’s chemical business, Kerr-McGee agreed to reimburse Tronox
for 50% of certain qualifying environmental remediation costs incurred and paid by Tronox and its subsidiaries before November 28, 2012,
subject to certain limitations and conditions. The reimbursement obligation is limited to a maximum aggregate reimbursement of $100 million.
As of December 31, 2008, the Company has a $96 million liability recorded for the guarantee obligation.
The Company is guarantor for specific financial obligations of a trona mining affiliate. The investment in this entity is accounted for
using the equity method. The Company has guaranteed a portion of amounts due under a term loan. The Company’s guarantee under the term
loan expires in 2010, coinciding with the maturity of
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14. Contingencies (Continued)
that agreement. The Company would be obligated to pay $15 million under the term loan if the affiliate defaulted on the obligation. No liability
has been recognized for this guarantee as of December 31, 2008.
In connection with its various acquisitions, the Company routinely indemnifies the former officers and directors of acquired companies in
respect to acts or omissions occurring prior to the effective date of the acquisition. The Company also agrees to maintain directors’ and
officers’ liability insurance on these individuals with respect to acts or omissions occurring prior to the acquisition, generally for a period of six
years. No liability has been recognized for these indemnifications.
The Company also provides certain indemnifications in relation to dispositions of assets. These indemnifications typically relate to
disputes, litigation or tax matters existing at the date of disposition. In connection with the 2006 sale of its Canadian subsidiary, the Company
indemnified the purchaser for potential future audit adjustments that may be imposed by the Canadian taxing authorities for tax years prior to
the sale. During 2008, the purchaser notified Anadarko that $90 million of the indemnity is no longer relevant as a result of the effective
settlement of the underlying contingent obligation. Accordingly, the Company reversed a portion of its recorded liability. The Company
believes it is probable that the remaining indemnification will be settled with the purchaser in cash. At December 31, 2008, other long-term
liabilities included a $40 million liability for this contingency.
Other The Company is subject to other legal proceedings, claims and liabilities which arise in the ordinary course of its business. In the
opinion of Anadarko, the liability with respect to these actions will not have a material effect on the Company’s financial position, results of
operations or cash flow of the Company.
Anadarko is also subject to various environmental remediation and reclamation obligations arising from federal, state and local laws and
regulations. As of December 31, 2008, the Company’s balance sheet included a $119 million liability for remediation and reclamation
obligations, most of which were incurred by companies that Anadarko has acquired. The Company continually monitors the liability recorded
and the remediation and reclamation process.
15. Other Taxes
Taxes incurred, other than income taxes, are as follows:
2008 2007 2006

Production and severance $1,135 $ 998 $339
Ad valorem 221 178 187
Other 96 58 23
Total $1,452 $1,234 $549
In July 2006, the Algerian parliament approved legislation establishing an exceptional profits tax on foreign companies’ Algerian oil
production. In December 2006, implementing regulations regarding this legislation were issued. These regulations provide for an exceptional
profits tax imposed on gross production at rates of taxation ranging from 5% to 50% based on average daily production volumes for each
calendar month in which the price of Brent crude averages over $30 per barrel, retroactively effective to August 2006 production. Uncertainty
existed at that time as to whether the exceptional profits tax would apply to the full value of production or only to the value of production in
excess of $30 per barrel. In 2006, Anadarko recorded a $103 million accrual for the tax, assuming the tax would be applied only to the amounts
in excess of $30 per barrel.
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15. Other Taxes (Continued)
In January 2007, Sonatrach, the national oil and gas company of Algeria, advised Anadarko that it would begin collecting the exceptional
profits tax from Anadarko’s share of production commencing with March 2007 liftings, including for the prior months since the new tax went
into effect. In April 2007, ALNAFT, the new agency in the Algerian Ministry of Energy and Mines responsible for overseeing the Algerian
hydrocarbons industry, issued the Application Procedure further defining the procedure and conditions under which the exceptional profits
tax is applied and the methodology for its calculation. The Application Procedure and other information supplied by Sonatrach revealed that
the exceptional profits tax was being applied to the full value of production rather than to the amounts in excess of $30 per barrel. This was
evidenced by changes in the Company’s crude oil lifting schedule, which was conveyed to Anadarko by Sonatrach. As a result, Anadarko
changed the measurement basis for the exceptional profits tax liability in the first quarter of 2007 to reflect the application of the tax rate to the
full value of production. On that measurement basis, the Company recognized production tax expense of $648 million and $705 million for 2008
and 2007, respectively. Of the 2007 amount, $87 million, or $0.19 per diluted share, was related to 2006 sales and income from continuing
operations.
In response to the Algerian government’s imposition of the exceptional profits tax, the Company has notified Sonatrach of its
disagreement with the collection of the exceptional profits tax. The Company believes that the Production Sharing Agreement (PSA) provides
fiscal stability through several of its provisions that require Sonatrach to pay all taxes and royalties. To facilitate discussions between the
parties in an effort to resolve the dispute, on October 31, 2007, the Company initiated a conciliation proceeding on the exceptional profits tax as
provided in the PSA. Any recommendation issued by a conciliation board (Conciliation Board) arising out of the conciliation proceeding is
non-binding on the parties. The Conciliation Board issued its non-binding recommendation on November 26, 2008, which the Company
received on December 1, 2008. On February 15, 2009, the Company initiated arbitration against Sonatrach with regard to the exceptional profits
tax. In conformance with the terms of the PSA, a notice of arbitration was submitted to Sonatrach.
16. Income Taxes
Components of income tax expense are as follows:
2008 2007 2006

millions
Current
Federal $1,111 $ 2,764 $ 291
State 40 189 25
Foreign 1,031 658 616
Total 2,182 3,611 932
Deferred
Federal 89 (989) 525
State (7) (40) (73)
Foreign (116) (23) (121)
Total (34) (1,052) 331
Total $2,148 $ 2,559 $1,263
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16. Income Taxes (Continued)
Total income taxes differed from the amounts computed by applying the statutory income tax rate to income from continuing operations
before income taxes. The sources of these differences are as follows:
2008 2007 2006

millions except percentages
Income from continuing operations before income taxes
Domestic $3,275 $5,449 $2,897
Foreign 2,071 880 840
Total $5,346 $6,329 $3,737
Statutory tax rate 35% 35% 35%
Tax computed at statutory rate $1,871 $2,215 $1,308
Adjustments resulting from:
State income taxes (net of federal income tax benefit) 23 111 39
Texas margin tax law change (net of federal income tax benefit) — (14) (69)
Foreign taxes (less than) greater than federal statutory tax rate (56) 59 123
Non-deductible Algerian exceptional profits tax (1) 246 268 39
U.S. tax on foreign income inclusions and distributions 124 105 29
Excess U.S. foreign tax credit generated — — (195)
Other — net (60) (185) (11)
Total income tax expense $2,148 $2,559 $1,263
(1)
Exceptional profits tax is not deductible for Algerian income tax purposes.
The effect of stock-based compensation deducted for tax purposes in excess of amounts recognized for financial accounting purposes
has been credited directly to paid-in capital in amounts of $5 million, $28 million and $45 million for 2008, 2007 and 2006, respectively.
Tax effects related to restructuring of certain foreign operations in prior years have been recorded to other long-term liabilities on the
balance sheet at December 31, 2008 and 2007 and are being recognized in the income statement over the estimated life of the related properties
under Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements.” During 2008 and 2007, ARB No. 51 liabilities of $47
million and $184 million, respectively, associated with internal restructurings were recorded to other long-term liabilities and will be recognized
as income in future periods.
Certain subsidiaries of the Company are currently in administrative appeals with the Internal Revenue Service or under examination with
various foreign jurisdictions for years prior to their acquisition by the Company. The Company determined in 2008 and 2007 that increases in
tax liabilities related to pre-acquisition taxes of approximately $310 million and $16 million, respectively, were required due to completion of
audits and administrative appeals, filing amended returns, re-evaluation of contingencies, re-establishment of deferred income tax liabilities
related to prior acquisitions and changes to the tax basis of acquired assets and liabilities. Accordingly, these liabilities were recorded with an
offsetting increase in goodwill.
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The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at December 31, 2008
and 2007 are as follows:
2008 2007
millions
Net current deferred tax assets $ 34 $ 112
Net long-term deferred tax assets 2 17
Net current deferred tax liability — —
Oil and gas exploration and development operations (9,121) (9,538)
Mineral operations (418) (424)
Midstream and other depreciable properties (862) (1,197)
Other (718) (233)
Gross long-term deferred tax liabilities (11,119) (11,392)
Oil and gas exploration and development costs 215 187
Net operating loss carryforward 322 303
Foreign tax credit carryforward 59 133
Other 1,058 1,027
Gross long-term deferred tax assets 1,654 1,650
Less: valuation allowance on deferred tax assets not expected to be realized (509) (472)
Net long-term deferred tax assets 1,145 1,178
Net long-term deferred tax liabilities (9,974) (10,214)
Total deferred taxes $ (9,938) $(10,085)
Total deferred taxes at December 31, 2008 and 2007 include state deferred taxes, net of federal benefit, of approximately $358 million and
$309 million, respectively. Total deferred taxes as of December 31, 2008 and 2007 also include foreign deferred taxes of approximately $189
million and $487 million, respectively. Changes to the valuation allowance, due to a change in judgment about the realizability of the related
deferred assets in future years, were $17 million for 2008.
At December 31, 2008 and 2007, the Company had income taxes receivable of $96 million and $591 million, respectively, that are included
in accounts receivable others. In addition, $356 million and $271 million of accrued income taxes were included in accrued expenses at
December 31, 2008 and 2007, respectively.
Tax carryforwards at December 31, 2008, which are available for utilization on future income tax returns, are as follows:
Domestic Foreign Expiration

millions
Net operating loss — regular tax $ — $ 134 2012-indef.
Net operating loss — state $ 4,451 $ — 2009-2027
Foreign tax credits $ 59 $ — 2014-2017
Texas margins tax credit $ 40 $ — 2027
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At adoption of FIN 48 on January 1, 2007, the Company had unrecognized tax benefits of $120 million, including $23 million of tax interest
and penalties, net of the federal income tax benefit. The adoption of FIN 48 resulted in an increase of $72 million to retained earnings and a
decrease of $139 million in goodwill.
Changes in the balance of unrecognized tax benefits excluding tax interest and penalties are as follows:
millions
Balance at January 1, 2008 $238
Increases related to prior year tax positions 32
Decreases related to prior year tax positions (38)
Settlements (88)
Lapse of statutes of limitation (12)
Balance at December 31, 2008 $132
Included in the balance of unrecognized tax benefits are potential benefits of $105 million that would affect the effective tax rate on
income from continuing operations if recognized. Also included in the balance at December 31, 2008 are $39 million related to tax positions for
which the ultimate deductibility is highly certain but the timing of such deductibility is uncertain. The Company estimates that $80 million to
$100 million of unrecognized tax benefits related to adjustments to taxable income, credits and associated interest previously recorded
pursuant to FIN 48 will reverse within the next 12 months due to the expiration of statutes of limitation and audit settlements.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2008 and
2007, the Company had approximately $28 million and $8 million, respectively, of accrued interest related to uncertain tax positions. During
2008 and 2007, the Company recognized $8 million and $4 million, respectively, in income tax expense for interest and penalties.
The following is a list of tax years subject to examination by major tax jurisdiction:
Tax Year
United States 1999-2007
China 2005-2007
Algeria 2005-2007
17. Statements of Cash Flows Supplemental Information
Net cash provided by investing activities for discontinued operations in 2006 includes proceeds of $4.2 billion from the disposition of
Canadian operations, net of cash included in the sale. In cash flow from operating activities for 2007, the changes reported as other items-net
include increases in other long-term liabilities-other of $626 million related to operating activities.
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17. Statements of Cash Flows Supplemental Information (Continued)
The following table presents amounts of cash paid for interest (net of amounts capitalized) and income taxes, including amounts related
to discontinued operations, and non-cash transactions.
2008 2007 2006

millions
Cash paid:
Interest $ 762 $1,107 $594
Income taxes (1) $1,060 $2,241 $778
Non-cash investing activities:
Receipt of interest in Permian LLC in exchange for interests in oil and gas properties (See Note 6) $ — $1,000 $—
Receipt of interest in Midstream LLCs in exchange for interests in natural gas gathering systems and associated
processing plants (See Note 6) $ — $1,848 $—
Fair value of properties and equipment received in non-cash exchange transactions $ 108 $ 88 $151
(1)
Includes $378 million and $2.3 billion in 2008 and 2007, respectively, related to taxable gains on divestitures.
18. Major Customers
The Company’s natural gas is sold to interstate and intrastate gas pipelines, direct end-users, industrial users, local distribution
companies and gas marketers. Crude oil and condensate are sold to marketers, gatherers and refiners. NGLs are sold to direct end-users,
refiners and marketers. These purchasers are located in the United States, Singapore and China. The majority of the Company’s receivables are
paid within two months following the month of purchase.
The Company performs a credit analysis of customers prior to making any sales to new customers or increasing credit for existing
customers. Based upon this credit analysis, the Company may require a standby letter of credit or a financial guarantee. As of December 31,
2008 and 2007, accounts receivable are shown net of allowance for uncollectible accounts of $24 million and $10 million, respectively.
In 2008, 2007 and 2006, there were no sales to individual customers that exceeded 10% of the Company’s total sales revenues.
19. Segment and Geographic Information
Anadarko’s primary business segments are vertically integrated within the oil and gas industry. These segments are managed separately
because of the nature of their products and services, as well as unique technology, distribution and marketing requirements. The Company’s
three operating segments are oil and gas exploration and production, midstream, and marketing. The 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 and gas production. The marketing segment sells most of Anadarko’s production, as well as
commodities purchased from third parties.
To assess the operating results of Anadarko’s segments, management uses income from continuing operations before income taxes,
interest expense, exploration expense, DD&A and impairments (Adjusted EBITDAX). Anadarko’s definition of Adjusted EBITDAX excludes
exploration expense, as exploration expense is not an indicator of operating efficiency for a given reporting period, but is monitored by
management as part of costs incurred in exploration and development activities. Similarly, DD&A expense and impairments are excluded from
Adjusted EBITDAX as a measure of segment operating performance, because capital
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19. Segment and Geographic Information (Continued)
expenditures are evaluated at the time capital costs are incurred. The Company’s Adjusted EBITDAX also excludes interest expense to allow
for assessment of segment operating results without regard to Anadarko’s financing methods or capital structure. 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. Therefore,
Anadarko’s consolidated Adjusted EBITDAX should be considered in conjunction with income from continuing operations and other
performance measures, such as operating income or cash flow from operating activities. Below is a reconciliation of consolidated Adjusted
EBITDAX to income from continuing operations before income taxes.
2008 2007 2006

millions
Income from continuing operations before income taxes $ 5,346 $ 6,329 $3,737
Exploration expense 1,369 905 737
Interest expense 742 1,092 650
Consolidated Adjusted EBITDAX $10,874 $11,217 $7,203
The Company’s accounting policies for individual segments are the same as those described in the summary of significant accounting
policies, with the following exceptions. Certain intersegment commodity contracts may meet the Generally Accepted Accounting Principles
(GAAP) definition of a derivative instrument, which would be accounted for at fair value under GAAP. However, Anadarko accounts for such
intersegment arrangements as executory contracts. Additionally, intersegment asset transfers are accounted for at historical cost basis, and do
not give rise to gain or loss recognition.
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The following table presents selected financial information for Anadarko’s operating segments. Information presented below as “Other
and Intersegment Eliminations” includes results from hard minerals joint ventures and royalty arrangements, operating activities that are not
considered operating segments, as well as corporate and financing activities.
Oil and Gas Other and

Exploration Intersegment
& Production Midstream Marketing Eliminations Total
millions
2008
Sales revenues $ 6,345 $ 267 $ 8,028 $ — $14,640
Intersegment revenues 6,933 1,088 (7,532) (489) —
Gains (losses) on divestitures and other, net 992 1 — 90 1,083
Total revenues and other 14,270 1,356 496 (399) 15,723
Operating costs and expenses (1) 3,353 905 457 60 4,775
Other (income) expense, net — — — 51 51
Minority interests — 23 — — 23
Total costs and expenses 3,353 928 457 111 4,849
Adjusted EBITDAX $ 10,917 $ 428 $ 39 $ (510) $10,874
Net properties and equipment $ 32,436 $ 2,987 $ 27 $ 1,597 $37,047
Capital expenditures $ 4,274 $ 513 $ — $ 94 $ 4,881
Goodwill $ 5,143 $ 139 $ — $ — $ 5,282
2007
Sales revenues $ 5,490 $ 202 $ 5,503 $ (63) $ 11,132
Intersegment revenues 3,872 1,268 (4,850) (290) —
Gains (losses) on divestitures and other, net 4,129 532 — 99 4,760
Total revenues and other 13,491 2,002 653 (254) 15,892
Operating costs and expenses (1) 2,854 1,108 419 368 4,749
Other (income) expense, net — — — (74) (74)
Total costs and expenses 2,854 1,108 419 294 4,675
Adjusted EBITDAX $ 10,637 $ 894 $ 234 $ (548) $ 11,217
Net properties and equipment $ 33,150 $ 2,694 $ 28 $ 1,579 $ 37,451
Capital expenditures $ 3,215 $ 665 $ 22 $ 88 $ 3,990
Goodwill $ 4,847 $ 108 $ — $ — $ 4,955
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Oil and Gas Other and

Exploration Intersegment
& Production Midstream Marketing Eliminations Total
2006
Sales revenues $ 5,045 $ 140 $ 5,111 $ (180) $10,116
Intersegment revenues 4,141 577 (4,730) 12 —
Gains (losses) on divestitures and other, net 26 — — 88 114
Total revenues and other 9,212 717 381 (80) 10,230
Operating costs and expenses (1) 1,862 534 303 334 3,033
Other (income) expense, net — — — (6) (6)
Total costs and expenses 1,862 534 303 328 3,027
Adjusted EBITDAX $ 7,350 $ 183 $ 78 $ (408) $ 7,203
Net properties and equipment $ 35,506 $ 4,281 $ 25 $ 1,624 $41,436
Capital expenditures $ 3,769 $ 229 $ 50 $ 78 $ 4,126
Goodwill $ 4,048 $ — $ — $ — $ 4,048
(1)
Operating costs and expenses exclude exploration, DD&A and impairment expenses since they are excluded from Adjusted EBITDAX.
The following table shows Anadarko’s sales revenues and other (based on the origin of the sales) and net properties and equipment by
geographic area:
2008 2007 2006

millions
Sales Revenues
United States $11,988 $ 9,061 $ 8,205
Algeria 2,158 1,641 1,543
Other International 494 430 368
Total $14,640 $11,132 $10,116
2008 2007
millions
Net Properties and Equipment
United States $35,014 $34,603
Algeria 610 604
Other International 1,423 2,244
Total $37,047 $37,451
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20. Pension Plans, Other Postretirement Benefits and Employee Savings Plans
Pension Plans and Other Postretirement Benefits The Company has non-contributory defined benefit pension plans, including both
qualified and supplemental plans, and a foreign contributory defined benefit pension plan. The Company also provides certain health care and
life insurance benefits for retired employees. Health care benefits are funded by contributions from the Company and the retiree. The
Company’s retiree life insurance plan is noncontributory.
In 2008, the Company made contributions of $63 million to its funded pension plans, $13 million to its unfunded pension plans and $19
million to its unfunded other postretirement benefit plans. Contributions to the funded plans increase the plan assets while contributions to
unfunded plans are used for current benefit payments. Based on the impact of recent market volatility on the plan assets, the Company expects
to contribute up to $250 million to its funded pension plans in 2009. In addition, the Company expects to contribute $23 million to its unfunded
pension plans and $22 million to its unfunded other postretirement benefit plans in 2009.
Anadarko adopted SFAS No. 158 as of December 31, 2006. SFAS No. 158 requires the Company, among other things, to recognize the
overfunded or underfunded status of each defined benefit postretirement plan in its balance sheet, measured as the difference between the fair
value of plan assets and the benefit obligation, and recognize changes in the funded status of a plan during the reporting period as a
component of accumulated comprehensive income (loss).
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20. Pension Plans, Other Postretirement Benefits and Employee Savings Plans (Continued)
The following table sets forth changes in the benefit obligations and fair value of plan assets for the Company’s pension and other
postretirement benefit plans for the years ended December 31, 2008 and 2007, as well as the funded status of the plans and amounts
recognized in the financial statements as of December 31, 2008 and 2007.
Pension Benefits Other Benefits

2008 2007 2008 2007
millions
Change in benefit obligations
Benefit obligations at beginning of year $ 1,321 $ 1,487 $ 327 $ 343
Service cost 56 58 14 15
Interest cost 78 80 20 20
Plan amendments 7 1 — (2)
Settlements — 1 — —
Curtailments — (27) — (20)
Termination benefits — 31 — 5
Actuarial (gain) loss (23) (16) (23) (12)
Contributions by plan participants 1 1 5 4
Benefit payments (140) (296) (24) (26)
Foreign currency exchange rate changes (20) 1 — —
Benefit obligations at end of year $ 1,280 $ 1,321 $ 319 $ 327
Change in plan assets
Fair value of plan assets at beginning of year $ 1,088 $ 1,219 $ — $ —
Actual return on plan assets (260) 74 — —
Employer contributions 76 90 19 22
Contributions by plan participants 1 1 5 4
Benefit payments (140) (296) (24) (26)
Foreign currency exchange rate changes (17) — — —
Fair value of plan assets at end of year $ 748 $ 1,088 $ — $ —
Funded status of the plans at end of year $ (532) $ (233) $ (319) $ (327)
Total recognized amounts in the balance sheet consist of:
Accrued expenses $ (8) $ (11) $ (22) $ (22)
Other long-term liabilities—other (524) (222) (297) (305)
Total $ (532) $ (233) $ (319) $ (327)
Total recognized amounts in accumulated other comprehensive income consist of:
Prior service cost $ 9 $ 4 $ 2 $ 1
Net actuarial (gain) loss 509 207 (14) 8
Total $ 518 $ 211 $ (12) $ 9
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The accumulated benefit obligation for all defined benefit pension plans was $1.2 billion and $1.1 billion as of December 31, 2008 and
2007, respectively. For the Company’s defined benefit pension plans with accumulated benefit obligations in excess of plan assets, the
projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $1.2 billion, $1.1 billion and $699 million,
respectively, as of December 31, 2008, and $609 million, $550 million and $447 million, respectively, as of December 31, 2007.
The following table sets forth the Company’s pension and other postretirement benefit cost and amounts recognized in other
comprehensive income (before tax benefit).

2008 2007 2006 2008 2007 2006
millions
Components of net periodic benefit cost
Service cost $ 56 $ 58 $ 49 $ 14 $ 15 $ 16
Interest cost 78 80 59 20 20 14
Expected return on plan assets (80) (82) (64) — — —
Settlements — 4 8 — — —
Curtailments — (4) — — 2 —
Termination benefits — 31 — — 5 —
Amortization of prior service (credit) cost 1 1 1 (1) — 1
Amortization of actuarial (gain) loss 10 15 20 — 1 3
Net periodic benefit cost $ 65 $103 $ 73 $ 33 $ 43 $ 34
Amounts recognized in other comprehensive income (expense)
Net actuarial gain (loss) $(312) $ 31 $— $ 22 $ 34 $ —
Amortization of net actuarial gain (loss) 10 17 — — 1 —
Prior service credit (cost) (6) — — — 6 —
Amortization of prior service credit (cost) 1 — — (1) — —
Additional minimum liability — — 10 — — —
Total amounts recognized in other comprehensive income (expense) $(307) $ 48 $ 10 $ 21 $ 41 $ —
The estimated net actuarial loss and prior service cost for the pension plans, which will be amortized from accumulated other
comprehensive income into net periodic benefit cost in 2009, is $36 million, of which $35 million represents amortization of net actuarial losses
and $1 million represents amortization of net prior service cost.
Following are the weighted-average assumptions used by the Company in determining the pension and other postretirement benefit
obligations as of December 31, 2008 and 2007:

2008 2007 2008 2007
percent
Discount rate 6.0% 6.0% 6.0% 6.25%
Rates of increase in compensation levels 5.0% 5.0% n/a 5.0%
The discount rate assumption used by the Company is meant to reflect the interest rate at which the pension and other postretirement
obligations could effectively be settled on the measurement date. The Company currently uses a yield curve analysis, for a majority of the
plans, to support the discount rate assumption. This
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analysis involves the creation of a hypothetical Aa spot yield curve represented by a series of high-quality, non-callable, marketable bonds,
then discounts the projected cash flows from each plan at interest rates on the created curve specifically applicable to the timing of each
respective cash flow. The present values of the cash flows are then accumulated, and a weighted-average discount rate is calculated by
imputing the single discount rate that equates to the total present value of the cash flows. The consolidated discount rate assumption is
determined by evaluation of the weighted-average discount rates determined for each of the Company’s significant pension and
postretirement plans.
Following are the weighted-average assumptions used by the Company in determining the net periodic pension and other postretirement
benefit cost for 2008, 2007 and 2006:

2008 2007 2006 2008 2007 2006
percent
Discount rate 6.0% 5.75% 5.75% 6.0% 5.75% 5.75%
Long-term rate of return on plan assets 7.75% 7.75% 7.75% n/a n/a n/a
Rates of increase in compensation levels 5.0% 5.0% 5.0% n/a 5.0% 5.0%
The Company has adopted a balanced, diversified investment strategy, with the intent of maximizing returns without exposure to undue
risk. Investments are typically made through investment managers across several investment categories (Domestic Large and Small Cap,
International, Domestic Fixed Income, Real Estate and Private Equity), with selective exposure to Growth/Value investment styles. Performance
for each investment is measured relative to the appropriate index benchmark for its category. Target asset allocation percentages by major
category are 55%-65% equity securities, 25%-35% fixed income and zero to 10% other. Investment managers have full discretion as to
investment decisions regarding all funds under their management to the extent permitted within investment guidelines. Certain investments are
prohibited, including short sales, sales on margin, securities of companies in bankruptcy, investments in financial futures and commodities and
currency exchanges.
The Company’s pension plans as of December 31, 2008 and 2007 were comprised of assets by category as follows:
2008 2007
percent
Assets
Equity securities 55% 63%
Fixed income 36 32
Other 9 5
Total 100% 100%
There are no direct investments in Anadarko securities included in plan assets; however, there may be indirect investments in Anadarko
securities through the plans’ mutual fund investments. The expected long-term rate of return on plan assets assumption was determined
starting with the year-end 2008 pension investment balances by category and projected target asset allocations for 2009. The expected return
for each of these categories was determined by using capital market projections.
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The following benefit payments, which reflect expected future service as appropriate, are expected to be paid as follows:
Pension Other
Benefit Benefit
Payments Payments
millions
2009 135 22
2010 122 23
2011 126 24
2012 129 24
2013 129 24
2014-2018 616 122
For year-end 2008 measurement purposes, the Company used a combined health care cost trend rate, whereas for year-end 2007, the
Company used separate assumptions of cost increase rates for medical, prescription drugs and dental benefits covered by the plans. A 9%
annual rate of increase in the per capita cost of covered health care benefits was assumed for 2009, decreasing gradually to 5% in 2017 and
later years. A 7% annual rate of increase in the per capita cost of covered medical benefits was assumed for 2008, decreasing gradually to 5%
in 2015 and later years. For prescription drug benefits, a rate of increase of 11% in the per capita cost was assumed for 2008, decreasing
gradually to 5% in 2015 and later years. For dental care costs, the Company assumed a flat rate of increase of 5%. The assumed health care
cost trend rate has a significant effect on the amounts reported for the health care plan. A 1% change in the assumed health care cost trend
rate over the projected period would have the following effects:
1% Increase 1% Decrease
millions
Effect on total of service and interest cost components $ 3 $ (3)
Effect on other postretirement benefit obligation $ 17 $ (14)
Employee Savings Plan The Company has employee savings plans (ESP) which are defined contribution plans. The Company matches a
portion of employees’ contributions. Participation in the ESP is voluntary and all regular employees of the Company are eligible to participate.
The Company charged to expense plan contributions of $43 million, $25 million and $20 million for 2008, 2007 and 2006, respectively.
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SUPPLEMENTAL QUARTERLY INFORMATION
(Unaudited)
Quarterly Financial Data

The following table shows summary quarterly financial data for 2008 and 2007.
First Second Third Fourth
Quarter Quarter Quarter Quarter
millions except share amounts
2008
Sales revenues $ 3,018 $ 2,416 $ 6,209 $ 2,997
Gains (losses) on divestitures and other, net (1) $ (40) $ 370 $ (60) $ 813
Operating income $ 795 $ 394 $ 3,557 $ 1,416
Income from continuing operations $ 237 $ 16 $ 2,164 $ 781
Income from discontinued operations, net of taxes $ 50 $ 7 $ 1 $ 5
Net income $ 287 $ 23 $ 2,165 $ 786
Net income available to common stockholders $ 286 $ 23 $ 2,165 $ 786
Earnings per share:
Income from continuing operations — basic $ 0.50 $ 0.03 $ 4.65 $ 1.70
Income from continuing operations — diluted $ 0.50 $ 0.03 $ 4.62 $ 1.70
Income from discontinued operations, net of taxes — basic $ 0.11 $ 0.02 $ — $ 0.01
Income from discontinued operations, net of taxes — diluted $ 0.11 $ 0.02 $ — $ 0.01
Net income available to common stockholders — basic $ 0.61 $ 0.05 $ 4.65 $ 1.71
Net income available to common stockholders — diluted $ 0.61 $ 0.05 $ 4.62 $ 1.71
Average number common shares outstanding — basic 468 468 466 459
Average number common shares outstanding — diluted 470 471 468 460
2007
Sales revenues $ 2,664 $ 3,052 $ 2,656 $ 2,760
Gains (losses) on divestitures and other, net $ 2,586 $ 1,533 $ 339 $ 302
Operating income $ 3,031 $ 2,394 $ 1,061 $ 861
Income from continuing operations $ 1,695 $ 1,306 $ 493 $ 276
Income (loss) from discontinued operations, net of taxes $ 27 $ 7 $ (12) $ (11)
Net income $ 1,722 $ 1,313 $ 481 $ 265
Net income available to common stockholders $ 1,721 $ 1,313 $ 480 $ 264
Earnings per share:
Income from continuing operations — basic $ 3.66 $ 2.81 $ 1.06 $ 0.59
Income from continuing operations — diluted $ 3.64 $ 2.79 $ 1.05 $ 0.59
Income (loss) from discontinued operations, net of taxes — basic $ 0.06 $ 0.02 $ (0.03) $ (0.02)
Income (loss) from discontinued operations, net of taxes — diluted $ 0.06 $ 0.02 $ (0.03) $ (0.02)
Net income available to common stockholders — basic $ 3.71 $ 2.82 $ 1.03 $ 0.56
Net income available to common stockholders — diluted $ 3.70 $ 2.81 $ 1.03 $ 0.56
Average number common shares outstanding — basic 463 465 466 467
Average number common shares outstanding — diluted 465 467 468 470
(1)
In March 2008, gains (losses) on divestitures and other, net includes a net $82 million reduction related to corrections resulting from
analysis of property records after the adoption of the successful efforts method of accounting. This net amount includes reductions of
$75 million and $88 million related to the first and second quarters of 2007, respectively. Management concluded that this misstatement
was not material relative to 2007 interim and annual results, or to the 2008 periods, and corrected the error in the first quarter of 2008. After
considering the effect of income taxes, the adjustments recorded in the first quarter of 2008 related to the adoption of the successful
efforts method of accounting in the third quarter of 2007, reduced net earnings for the year ended December 31, 2008 by $52 million.
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SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION
AND PRODUCTION ACTIVITIES
(Unaudited)
The supplementary oil and gas data that follows is presented in accordance with SFAS No. 69, “Disclosures about Oil and Gas
Producing Activities” and includes (1) capitalized costs, costs incurred and results of operations related to oil and gas producing activities,
(2) net proved oil and gas reserves, and (3) a standardized measure of discounted future net cash flows relating to proved oil and gas reserves.
The Other International reserves as of December 31, 2008 were located primarily in China. The discontinued operations presented on the
following pages are associated with the Company’s Canadian operations that were divested in 2006.
United Other
States Algeria Int’l Total
millions
Capitalized Costs Related to Oil and Gas Activities
2008
Capitalized
Unproved properties $ 9,489 $ 29 $ 910 $10,428
Proved properties 29,209 1,083 776 31,068
38,698 1,112 1,686 41,496
Accumulated DD&A 8,260 504 296 9,060
Net capitalized costs $30,438 $ 608 $1,390 $32,436
2007
Capitalized
Unproved properties $ 11,689 $ 13 $ 1,404 $ 13,106
Proved properties 24,082 1,030 1,001 26,113
35,771 1,043 2,405 39,219
Accumulated DD&A 5,429 446 194 6,069
Net capitalized costs $ 30,342 $ 597 $ 2,211 $ 33,150
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(Unaudited)
Costs Incurred in Oil and Gas Activities

The following table reflects total costs incurred, both capitalized and expensed, for oil and gas property acquisition, exploration and
development activities.
Total
United Other Continuing Discontinued
States Algeria Int’l Operations Operations Total
millions
2008
Unproved $ 391 $ — $ 14 $ 405 $ — $ 405
Proved 26 — — 26 — 26
Exploration 622 17 392 1,031 — 1,031
Development (3) 3,240 59 231 3,530 — 3,530
Total Costs Incurred $ 4,279 $ 76 $ 637 $ 4,992 $ — $ 4,992
2007
Unproved (1) $ (500) $ — $ 207 $ (293) $ — $ (293)
Proved (2) (604) — 13 (591) — (591)
Exploration 575 23 236 834 — 834
Development (3) 2,623 46 136 2,805 — 2,805
Total Costs Incurred $ 2,094 $ 69 $ 592 $ 2,755 $ — $ 2,755
2006
Unproved $11,975 $ — $1,397 $ 13,372 $ 54 $13,426
Proved 13,893 3 600 14,496 1 14,497
Exploration 673 22 111 806 92 898
Development (3) 2,958 54 72 3,084 400 3,484
Total Costs Incurred $29,499 $ 79 $2,180 $ 31,758 $ 547 $32,305
(1)
Includes purchase price adjustments related to finalizing the allocation of fair value to unproved properties acquired with the Kerr-McGee
and Western acquisitions in 2006 of $(608) million and $124 million associated with properties in the United States and other international
areas, respectively.
(2)
Includes purchase price adjustments related to finalizing the allocation of fair value to proved properties acquired with the Kerr-McGee
and Western acquisitions in 2006 of $(613) million and $13 million associated with properties in the United States and other international
areas, respectively.
(3)
Development costs incurred for the year include costs related to the prior year-end proved undeveloped reserves as follows:
2008 2007 2006

millions
United States $592 $857 $1,161
Algeria 21 11 34
Total Continuing Operations $703 $936 $1,211
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(Unaudited)
Results of Operations
Net revenues from production in the following schedule includes only the revenues from the production and sale of gas, oil, condensate
and NGLs. The income tax expense is calculated by applying the current statutory tax rates to the revenues after deducting costs, which
include DD&A allowances, after giving effect to permanent differences. The results of operations exclude general office overhead and interest
expense attributable to oil and gas activities.
Total
millions except per barrel amounts
2008
Net revenues from production
Third-party sales $ 4,929 $ 1,465 $ 231 $ 6,625 $ — $ 6,625
Sales to consolidated affiliates 5,977 693 263 6,933 — 6,933
Gains on property dispositions 137 — 855 992 — 992
11,043 2,158 1,349 14,550 — 14,550
Production costs
Oil and gas operating 1,004 53 47 1,104 — 1,104
Oil and gas transportation and other 528 23 1 552 — 552
Production related general and administrative expenses 256 17 9 282 — 282
Other taxes 685 648 89 1,422 — 1,422
2,473 741 146 3,360 — 3,360
Exploration expenses 1,011 26 332 1,369 — 1,369
Depreciation, depletion and amortization 2,818 65 110 2,993 — 2,993
Impairments related to oil and gas properties 113 — — 113 — 113
4,628 1,326 761 6,715 — 6,715
Income tax expense 1,606 743 198 2,547 — 2,547
Results of operations $ 3,022 $ 583 $ 563 $ 4,168 $ — $ 4,168
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(Unaudited)
Results of Operations (Continued)
Total
millions except per barrel amounts
2007
Third-party sales $ 4,190 $ 1,223 $ 360 $ 5,773 $ — $ 5,773
Sales to consolidated affiliates 3,384 418 70 3,872 — 3,872
Gains on property dispositions 3,940 — 189 4,129 — 4,129
11,514 1,641 619 13,774 — 13,774
Production costs
Oil and gas operating 993 47 59 1,099 — 1,099
Production related general and
administrative expenses 137 29 13 179 — 179
Other taxes 446 705 33 1,184 — 1,184
2,002 805 106 2,913 — 2,913
Exploration expenses 671 15 219 905 — 905
Depreciation, depletion and amortization 2,435 63 113 2,611 — 2,611
Impairments related to oil and gas properties 13 — 11 24 — 24
6,393 758 170 7,321 — 7,321
Income tax expense 2,252 540 31 2,823 — 2,823
Results of operations $ 4,141 $ 218 $ 139 $ 4,498 $ — $ 4,498
2006
Third-party sales $ 4,480 $ 535 $ 246 $ 5,261 $ 695 $ 5,956
Sales to consolidated affiliates 3,011 1,008 122 4,141 — 4,141
Gains on property dispositions — — 26 26 — 26
7,491 1,543 394 9,428 695 10,123
Production costs
Oil and gas operating 713 42 67 822 110 932
Production related general and
administrative expenses 152 8 9 169 62 231
Other taxes 405 103 2 510 10 520
1,587 176 79 1,842 182 2,024
Exploration expenses 568 21 148 737 18 755
Depreciation, depletion and amortization 1,428 59 125 1,612 119 1,731
Impairments related to oil and gas properties 4 — 184 188 4 192
3,904 1,287 (142) 5,049 372 5,421
Income tax expense 1,396 528 (68) 1,856 140 1,996
Results of operations $ 2,508 $ 759 $ (74) $ 3,193 $ 232 $ 3,425
129
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(Unaudited)
Oil and Gas Reserves

The following table shows estimates of proved reserves, proved developed reserves and proved undeveloped reserves (PUDs), net of
royalty interests, of natural gas, crude oil, condensate and NGLs owned at year-end and changes in proved reserves during the last three
years. Volumes for natural gas are in billions of cubic feet (Bcf) at a pressure base of 14.73 pounds per square inch and volumes for oil,
condensate and NGLs are in millions of barrels (MMBbls). Total volumes are in millions of barrels of oil equivalent (MMBOE). For this
computation, one barrel is the equivalent of six thousand cubic feet of gas. NGLs are included with oil and condensate reserves and the
associated shrinkage has been deducted from the gas reserves.
Algerian reserves are shown in accordance with each PSA. The reserves include estimated quantities allocated to Anadarko for recovery
of costs and Algerian income taxes and Anadarko’s net equity share after recovery of such costs. Other international reserves are shown in
accordance with the respective PSA or risk service contract and are calculated using the economic interest method.
During 2008, Anadarko added 102 MMBOE of proved reserves primarily as the result of successful drilling in the Rockies and
developments and appraisals in the deepwater Gulf of Mexico. Reserve revisions for 2008 included an increase of 188 MMBOE primarily
related to the large onshore natural gas plays, such as the Greater Natural Buttes, Wattenberg and Pinedale fields, as a result of successful
infill drilling, in addition to positive revisions to the Peregrino field offshore Brazil which was sold in 2008, partially offset by a decrease of 102
MMBOE related to prices for oil and NGLs. Sales of proved reserves in place totaled 137 MMBOE, related to properties located in the United
States and Brazil that were sold in 2008. During 2007, sales of proved reserves in place associated with the Company’s asset realignment
program totaled 620 MMBOE. Excluding the effect of divestitures, the Company added approximately 252 MMBOE of proved reserves in 2007.
Reserve adds were primarily driven by successful drilling in coalbed methane and conventional plays and successful infill drilling onshore in
the United States, as well as the initial recognition of proved reserves for the Peregrino development offshore Brazil.
The estimates of proved reserves are made using available geological and reservoir data as well as production performance data. These
estimates are reviewed annually and revised, either upward or downward, as warranted by additional data. Revisions are necessary due to
changes in, among other things, reservoir performance, prices, economic conditions and governmental restrictions as well as changes in the
expected recovery rates associated with infill drilling. Decreases in prices, for example, may cause a reduction in some proved reserves due to
reaching economic limits sooner.
Anadarko’s estimates of proved reserves and associated future net cash flows as of December 31, 2008 were made solely by the
Company’s engineers and are the responsibility of management. The procedures and methods used in preparing the Company’s estimates of
proved reserves and future net cash flows, as of December 31, 2008, were reviewed by an independent engineering firm, Miller and Lents, Ltd.
(M&L). The purpose of the review was to determine that procedures and methods used by Anadarko to estimate its proved reserves were
based on generally accepted engineering and evaluation principles and are in accordance with definitions contained in the rules of the SEC. In
each review, Anadarko’s technical staff presented M&L with an overview of the data, methods and assumptions used in its reserve estimates.
The data presented included pertinent seismic information, geologic maps, well logs, production tests, material balance calculations, reservoir
simulation models, well performance data, operating procedures and relevant economic criteria. Subsequent to the reviews, M&L was provided
with additional data and information that was requested in certain instances to satisfy M&L that the procedures and methods used were in
accordance with standard industry practice. Management’s intent in retaining M&L to review its procedures and methods is to provide for
objective third-party input on these procedures and methods and to gather industry information applicable to its reserve estimation and
reporting process.
130
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(Unaudited)
Oil and Gas Reserves (Continued)

In December 2008, the SEC released the final rule for “Modernization of Oil and Gas Reporting” (Modernization). The Modernization
disclosure requirements will permit reporting of oil and gas reserves using an average price based upon the prior 12-month period rather than
year-end prices and the use of new technologies to determine proved reserves, if those technologies have been demonstrated to result in
reliable conclusions about reserves volumes. Companies will also be allowed to disclose probable and possible reserves in SEC filed
documents. In addition, companies will be required to report the independence and qualifications of its reserves preparer or auditor and file
reports when a third party is relied upon to prepare reserves estimates or conduct a reserves audit. The Modernization disclosure requirements
become effective for Anadarko’s Annual Report on Form 10-K for the year ended December 31, 2009. The SEC is coordinating with the FASB
to obtain the revisions necessary to provide consistency with the Modernization. In the event that consistency is not achieved in time for
companies to comply with the Modernization, the SEC will consider delaying the compliance date.
131
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(Unaudited)

Natural Gas
(Bcf)
Total
States Int’l Operations Operations Total
Proved Reserves
December 31, 2005 6,578 — 6,578 1,332 7,910
Revisions of prior estimates (34) — (34) (14) (48)
Extensions, discoveries and other additions 234 — 234 31 265
Improved recovery 11 — 11 — 11
Purchases in place 4,256 — 4,256 — 4,256
Sales in place (1) — (1) (1,263) (1,264)
Production (558) — (558) (86) (644)
December 31, 2006 10,486 — 10,486 — 10,486
Revisions of prior estimates 460 — 460 — 460
Extensions, discoveries and other additions 460 — 460 — 460
Improved recovery 4 — 4 — 4
Purchases in place 4 — 4 — 4
Sales in place (2,212) — (2,212) — (2,212)
Production (698) — (698) — (698)
December 31, 2007 8,504 — 8,504 — 8,504
Revisions of prior estimates 199 — 199 — 199
Extensions, discoveries and other additions 336 — 336 — 336
Sales in place (184) — (184) — (184)
Production (750) — (750) — (750)
December 31, 2008 8,105 — 8,105 — 8,105
December 31, 2005 4,553 — 4,553 1,024 5,577
December 31, 2006 7,618 — 7,618 — 7,618
December 31, 2007 6,308 — 6,308 — 6,308
December 31, 2008 6,117 — 6,117 — 6,117
Proved Undeveloped Reserves
December 31, 2005 2,025 — 2,025 308 2,333
December 31, 2006 2,868 — 2,868 — 2,868
December 31, 2007 2,196 — 2,196 — 2,196
December 31, 2008 1,988 — 1,988 — 1,988
132
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(Unaudited)

Oil, Condensate and NGLs
(MMBbls)
Total
Proved Reserves
December 31, 2005 708 324 58 1,090 40 1,130
Revisions of prior estimates (46) (21) 1 (66) — (66)
Extensions, discoveries and other additions 11 6 — 17 — 17
Improved recovery 25 — — 25 — 25
Purchases in place 281 — 40 321 — 321
Sales in place — — (39) (39) (38) (77)
Production (54) (22) (8) (84) (2) (86)
December 31, 2006 925 287 52 1,264 — 1,264
Revisions of prior estimates 42 2 — 44 — 44
Extensions, discoveries and other additions 8 — 54 62 — 62
Improved recovery (9) — — (9) — (9)
Sales in place (240) — (11) (251) — (251)
Production (64) (25) (7) (96) — (96)
December 31, 2007 662 264 88 1,014 — 1,014
Revisions of prior estimates 53 (37) 36 52 — 52
Extensions, discoveries and other additions 40 — — 40 — 40
Sales in place (15) — (91) (106) — (106)
Production (54) (21) (5) (80) — (80)
December 31, 2008 692 206 28 926 — 926
December 31, 2005 340 195 31 566 28 594
December 31, 2006 505 176 38 719 — 719
December 31, 2007 392 158 24 574 — 574
December 31, 2008 435 123 22 580 — 580
December 31, 2005 368 129 27 524 12 536
December 31, 2006 420 111 14 545 — 545
December 31, 2007 270 106 64 440 — 440
December 31, 2008 257 83 6 346 — 346
133
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(Unaudited)

Total
(MMBOE)
Total
Proved Reserves
December 31, 2005 1,805 324 58 2,187 262 2,449
Revisions of prior estimates (1) (53) (21) 1 (73) (2) (75)
Extensions, discoveries and other additions 50 6 — 56 5 61
Purchases in place 990 — 40 1,030 — 1,030
Sales in place — — (39) (39) (248) (287)
Production (147) (22) (8) (177) (17) (194)
December 31, 2006 2,672 287 52 3,011 — 3,011
Revisions of prior estimates (1) 119 2 — 121 — 121
Extensions, discoveries and other additions 85 — 54 139 — 139
Improved recovery (9) — — (9) — (9)
Purchases in place 1 — — 1 — 1
Sales in place (609) — (11) (620) — (620)
Production (180) (25) (7) (212) — (212)
December 31, 2007 2,079 264 88 2,431 — 2,431
Revisions of prior estimates (1) 87 (37) 36 86 — 86
Extensions, discoveries and other additions 96 — — 96 — 96
Sales in place (46) — (91) (137) — (137)
Production (179) (21) (5) (205) — (205)
December 31, 2008 2,043 206 28 2,277 — 2,277
December 31, 2005 1,099 195 31 1,325 199 1,524
December 31, 2006 1,775 176 38 1,989 — 1,989
December 31, 2007 1,443 158 24 1,625 — 1,625
December 31, 2008 1,455 123 22 1,600 — 1,600
December 31, 2005 706 129 27 862 63 925
December 31, 2006 897 111 14 1,022 — 1,022
December 31, 2007 636 106 64 806 — 806
December 31, 2008 588 83 6 677 — 677
(1)
Revisions of prior estimates for 2008, 2007 and 2006 include 158 MMBOE, 109 MMBOE and 160 MMBOE, respectively, of additions
generated by Anadarko’s infill drilling programs.
134
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(Unaudited)
Discounted Future Net Cash Flows

Estimates of future net cash flows from proved reserves of gas, oil, condensate and NGLs were made in accordance with SFAS No. 69,
“Disclosures about Oil and Gas Producing Activities.” The amounts were prepared by the Company’s engineers and are shown in the
following table. The estimates are based on prices at year-end. Gas, oil, condensate and NGLs prices are escalated only for fixed and
determinable amounts under provisions in some contracts. Estimated future cash inflows are reduced by estimated future development,
production, abandonment and dismantlement costs based on year-end cost levels, assuming continuation of existing economic conditions,
and by estimated future income tax expense. Income tax expense, both U.S. and foreign, is calculated by applying the existing statutory tax
rates, including any known future changes, to the pretax net cash flows giving effect to any permanent differences and reduced by the
applicable tax basis. The effect of tax credits is considered in determining the income tax expense.
At December 31, 2008, the present value (discounted at 10%) of future net cash flows from Anadarko’s proved reserves was $12 billion,
(stated in accordance with the regulations of the SEC and the FASB). The decrease of $16.9 billion, or 59%, in 2008 compared to 2007 is
primarily due to lower commodity prices at year-end 2008.
The present value of future net cash flows does not purport to be an estimate of the fair market value of Anadarko’s proved reserves. An
estimate of fair value would also take into account, among other things, anticipated changes in future prices and costs, the expected recovery
of reserves in excess of proved reserves and a discount factor more representative of the time value of money and the risks inherent in
producing oil and gas. Significant changes in estimated reserve volumes or commodity prices could have a material effect on the Company’s
consolidated financial statements.
Expected future development costs over the next three years to develop PUDs as of December 31, 2008 are as follows:
2009 2010 2011

millions
United States $1,424 $1,450 $1,277
Algeria 202 344 190
Total $1,670 $1,812 $1,477
135
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(Unaudited)
Standardized Measure of Discounted Future Net Cash Flows

Relating to Proved Oil and Gas Reserves
United Other
States Algeria Int’l Total
millions
2008
Future cash inflows $61,086 $ 6,671 $ 858 $ 68,615
Future production costs 20,925 3,836 429 25,190
Future development costs 9,290 1,012 100 10,402
Future income tax expenses 10,037 913 26 10,976
Future net cash flows 20,834 910 303 22,047
10% annual discount for estimated timing of cash flows 9,431 570 75 10,076
Standardized measure of discounted future net cash flows $11,403 $ 340 $ 228 $ 11,971
2007
Future cash inflows $106,439 $ 25,296 $6,403 $ 138,138
Future production costs 27,124 8,874 2,543 38,541
Future development costs 8,358 1,156 924 10,438
Future income tax expenses 24,257 8,502 1,126 33,885
Future net cash flows 46,700 6,764 1,810 55,274
10% annual discount for estimated timing of cash flows 22,424 3,427 506 26,357
Standardized measure of discounted future net cash flows $ 24,276 $ 3,337 $1,304 $ 28,917
2006
Future cash inflows $ 98,537 $ 18,301 $2,425 $ 119,263
Future production costs 26,407 3,858 814 31,079
Future development costs 10,142 983 83 11,208
Future income tax expenses 20,891 5,592 365 26,848
Future net cash flows 41,097 7,868 1,163 50,128
10% annual discount for estimated timing of cash flows 19,743 4,356 396 24,495
Standardized measure of discounted future net cash flows $ 21,354 $ 3,512 $ 767 $ 25,633
136
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(Unaudited)
Changes in Standardized Measure of Discounted Future Net Cash Flows

Relating to Proved Oil and Gas Reserves
Total
millions
2008
Beginning of year $ 24,276 $ 3,337 $ 1,304 $ 28,917 $ — $ 28,917
Sales and transfers of oil and gas produced,
net of production costs (8,433) (1,417) (348) (10,198) — (10,198)
Net changes in prices and production costs (15,973) (6,238) (697) (22,908) — (22,908)
Changes in estimated future development
costs (19) 47 (1) 27 — 27
Extensions, discoveries, additions and
improved recovery, less related costs 137 — — 137 — 137
Development costs incurred during the
period 806 58 91 955 — 955
Revisions of previous quantity estimates 2,212 251 987 3,450 — 3,450
Sales of minerals in place (1,096) — (2,216) (3,312) — (3,312)
Accretion of discount 3,602 803 205 4,610 — 4,610
Net change in income taxes 6,734 3,564 729 11,027 — 11,027
Other (843) (65) 174 (734) — (734)
End of year $ 11,403 $ 340 $ 228 $ 11,971 $ — $ 11,971
2007
Beginning of year $ 21,354 $ 3,512 $ 767 $ 25,633 $ — $ 25,633
net of production costs (5,572) (836) (324) (6,732) — (6,732)
Net changes in prices and production costs 11,735 2,709 358 14,802 — 14,802
costs (11) (494) (635) (1,140) — (1,140)
improved recovery, less related costs 196 — 1,601 1,797 — 1,797
period 900 39 47 986 — 986
Revisions of previous quantity estimates 1,700 (281) 41 1,460 — 1,460
Purchases of minerals in place 16 — — 16 — 16
Sales of minerals in place (9,088) — (214) (9,302) — (9,302)
Accretion of discount 3,173 652 102 3,927 — 3,927
Net change in income taxes (1,375) (1,676) (500) (3,551) — (3,551)
Other 1,248 (288) 61 1,021 — 1,021
End of year $ 24,276 $ 3,337 $ 1,304 $ 28,917 $ — $ 28,917
137
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(Unaudited)
Changes in Standardized Measure of Discounted Future Net Cash Flows

Relating to Proved Oil and Gas Reserves (Continued)
Total
2006
Beginning of year $ 19,756 $ 5,738 $ 809 $ 26,303 $ 2,989 $ 29,292
net of production costs (5,904) (1,367) (289) (7,560) (513) (8,073)
Net changes in prices and production costs (10,974) (1,441) 5 (12,410) 48 (12,362)
costs (266) (520) 154 (632) 420 (212)
improved recovery, less related costs (432) 113 — (319) — (319)
period 1,021 66 12 1,099 191 1,290
Revisions of previous quantity estimates (1,866) (267) (22) (2,155) (13) (2,168)
Purchases of minerals in place 16,390 — 850 17,240 38 17,278
Sales of minerals in place — — (1,073) (1,073) (4,638) (5,711)
Accretion of discount 3,016 915 126 4,057 408 4,465
Net change in income taxes 27 403 195 625 1,088 1,713
Other 586 (128) — 458 (18) 440
End of year $ 21,354 $ 3,512 $ 767 $ 25,633 $ — $ 25,633
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
Anadarko’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the Company’s disclosure controls and
procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and
communicated to the issuer’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that
the Company’s disclosure controls and procedures are effective as of December 31, 2008.
Management’s Annual Report on Internal Control Over Financial Reporting

See Management’s Assessment of Internal Control Over Financial Reporting under Item 8 of this Form 10-K.
Attestation Report of the Registered Public Accounting Firm

See Report of Independent Registered Public Accounting Firm under Item 8 of this Form 10-K.
Changes in Internal Control Over Financial Reporting

There were no changes in Anadarko’s internal controls over financial reporting during the fourth quarter of 2008 that materially affected,
or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information

None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance

See Anadarko Board of Directors, Corporate Governance—Board of Directors, Corporate Governance—Committees of the Board and
Section 16(a) Beneficial Ownership Reporting Compliance in the Anadarko Petroleum Corporation Proxy Statement (Proxy Statement), for
the Annual Meeting of Stockholders of Anadarko Petroleum Corporation to be held May 19, 2009 (to be filed with the Securities and Exchange
Commission prior to April 9, 2009), each of which is incorporated herein by reference.
See list of Executive Officers of the Registrant under Item 4 of this Form 10-K, which is incorporated herein by reference.
The Company’s Code of Business Conduct and Ethics and the Code of Ethics for the Chief Executive Officer, Chief Financial Officer and
Chief Accounting Officer (Code of Ethics) can be found on the Company’s internet website located at www.anadarko.com. Any stockholder
may request a printed copy of the Code of Ethics by submitting a written request to the Company’s Corporate Secretary. If the Company
amends the Code of Ethics or grants a waiver, including an implicit waiver, from the Code of Ethics, the Company will disclose the information
on its internet website. The waiver information will remain on the website for at least 12 months after the initial disclosure of such waiver.
139
Table of Contents
Item 11. Executive Compensation

See Corporate Governance—Board of Directors—Compensation and Benefits Committee Interlocks and Insider Participation,
Corporate Governance—Board of Directors—Director Compensation, Corporate Governance—Director Compensation Table for 2008,
Compensation and Benefits Committee Report on 2008 Executive Compensation, Compensation Discussion and Analysis and Executive
Compensation in the Proxy Statement, each of which is incorporated herein by reference. The Compensation and Benefits Committee Report
and related information incorporated by reference herein shall not be deemed “soliciting material” or to be “filed” with the Securities and
Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or
Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such
filing.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
See Security Ownership of Certain Beneficial Owners and Management in the Proxy Statement, which is incorporated herein by
reference.
Equity Compensation Plan Table The following table sets forth information with respect to the equity compensation plans available to
directors, officers and employees of the Company as of December 31, 2008:
(b)
Weighted- (c)
average Number of securities
(a) exercise remaining available
Number of securities price of for future issuance
to be issued upon outstanding under equity
exercise of options, compensation plans
outstanding options, warrants (excluding securities
Plan category warrants and rights and rights reflected in column(a))
Equity compensation plans approved by
security holders 6,393,003 42.59 31,817,017
Equity compensation plans not approved
by security holders — — —
Total 6,393,003 42.59 31,817,017
Item 13. Certain Relationships and Related Transactions, and Director Independence
See Corporate Governance—Board of Directors and Transactions with Related Persons in the Proxy Statement, each of which is
incorporated herein by reference.
Item 14. Principal Accounting Fees and Services

See Independent Auditor in the Proxy Statement, which is incorporated herein by reference.
140
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PART IV
Item 15. Exhibits, Financial Statement Schedules

(a) Exhibits The following documents are filed as a part of this report or incorporated by reference:
(1) The consolidated financial statements of Anadarko Petroleum Corporation are listed on the Index to this report, page 68.
(2) Exhibits not incorporated by reference to a prior filing are designated by an asterisk (*) and are filed herewith; all exhibits not
so designated are incorporated herein by reference to a prior filing as indicated.
Exhibit File
Number Description Originally Filed as Exhibit Number
2(a) Agreement and Plan of Merger dated as of June 22, 2006, 2.1 to Form 8-K dated June 26, 2006 1-8968
among Anadarko Petroleum Corporation, APC Merger
Sub, Inc. and Western Gas Resources, Inc.
(b) Amendment No. 1 to Agreement and Plan of Merger 2.1 to Form 8-K dated July 12, 2006 1-8968
dated as of June 22, 2006, among Anadarko Petroleum
Corporation, APC Merger Sub, Inc. and Western Gas
Resources, Inc.
(c) Agreement and Plan of Merger dated as of June 22, 2006, 2.2 to Form 8-K dated June 26, 2006 1-8968
among Anadarko Petroleum Corporation, APC
Acquisition Sub, Inc. and Kerr-McGee Corporation
3(a) Restated Certificate of Incorporation of Anadarko 4(a) to Form S-3 dated May 9, 2001 333-60496
Petroleum Corporation, dated August 28, 1986
(b) Certificate of Amendment of Anadarko Petroleum 4.1 to Form 8-K dated July 28, 2000 1-8968
Corporation Restated Certificate of Incorporation, dated
July 13, 2000
(c) Certificate of Amendment of Anadarko Petroleum 3(d) to Form 10-Q for quarter ended June 30, 2006 1-8968
Corporation Restated Certificate of Incorporation, dated
May 11, 2006
(d) By-laws of Anadarko Petroleum Corporation, amended 3.1 to Form 8-K dated 1-8968
and restated as of May 20, 2008 May 27, 2008
4(a) Underwriting Agreement, dated September 14, 2006, 1.1 to Form 8-K dated September 19, 2006 1-8968
among Anadarko Petroleum Corporation and the
Underwriters
(b) Trustee Indenture dated as of September 19, 2006, 4.1 to Form 8-K dated September 19, 2006 1-8968
Anadarko Petroleum Corporation to The Bank of New
York Trust Company, N.A.
(c) Second Supplemental Indenture dated October 4, 2006, 4.1 to Form 8-K dated October 5, 2006 1-8968
among Anadarko Petroleum Corporation, Kerr-McGee
Corporation, and Citibank, N.A.
(d) Ninth Supplemental Indenture dated October 4, 2006, 4.2 to Form 8-K dated October 5, 2006 1-8968
among Anadarko Petroleum Corporation, Kerr-McGee
Corporation, and Citibank, N.A.
†10(i) 1998 Director Stock Plan of Anadarko Petroleum Appendix A to DEF 14A filed March 16, 1998 1-8968
Corporation, effective January 30, 1998
141
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Exhibit File
†10(ii) Form of Anadarko Petroleum Corporation 1998 Director 10.1 to Form 8-K dated November 17, 2005 1-8968
Stock Plan Stock Option Agreement
† (iii) 1993 Stock Incentive Plan 10(b)(xii) to Form 10-K for year ended December 31, 1993 1-8968
† (iv) First Amendment to Anadarko Petroleum Corporation Appendix A to DEF 14A filed March 12, 1997 1-8968
1993 Stock Incentive Plans
† (v) Second Amendment to Anadarko Petroleum 10(b)(xv) to Form 10-K for year ended December 31, 1997 1-8968
Corporation 1993 Stock Incentive Plans
† (vi) Anadarko Petroleum Corporation 1993 Stock Incentive 10(a) to Form 10-Q for quarter ended March 31, 1996 1-8968
Plan Stock Option Agreement
† (vii) Form of Anadarko Petroleum Corporation 1993 Stock 10(b)(xvii) to Form 10-K for year ended December 31, 1997 1-8968
Incentive Plan Stock Option Agreement
† (viii) Form of Anadarko Petroleum Corporation 1993 Stock 10(b)(xviii) to Form 10-K for year ended December 31, 1997 1-8968
Incentive Plan Restricted Stock Agreement
† (ix) Anadarko Petroleum Corporation Amended and Appendix A to DEF 14A filed March 18, 2005 1-8968
Restated 1999 Stock Incentive Plan
† (x) Form of Anadarko Petroleum Corporation Executive 10.2 to Form 8-K dated November 17, 2005 1-8968
1999 Stock Incentive Plan Stock Option Agreement
† (xi) Form of Anadarko Petroleum Corporation Non- 10.3 to Form 8-K dated November 17, 2005 1-8968
Executive 1999 Stock Incentive Plan Stock Option
Agreement
† (xii) Form of Stock Option Agreement—1999 Stock 10.4 to Form 8-K dated November 17, 2005 1-8968
Incentive Plan (UK Nationals)
† (xiii) Amendment to Stock Option Agreement Under the 10.1 to Form 8-K dated January 23, 2007 1-8968
Anadarko Petroleum Corporation 1999 Stock Incentive
Plan
† (xiv) Anadarko Petroleum Corporation 1999 Stock Incentive 10.3 to Form 8-K dated November 13, 2007 1-8968
Plan (Amendment to Performance Unit Agreement)
† (xv) Form of Anadarko Petroleum Corporation 1999 Stock 10(b)(xxiv) to Form 10-K for year ended December 31, 1999 1-8968
Incentive Plan Restricted Stock Agreement
† (xvi) Anadarko Petroleum Corporation 1999 Stock Incentive 10(b) to Form 10-Q for quarter ended March 31, 2004 1-8968
Plan Performance Share Agreement
† (xvii) Anadarko Petroleum Corporation 1999 Stock Incentive 10.1 to Form 8-K dated December 14, 2004 1-8968
Plan Performance Unit Agreement
† (xviii) Form of Anadarko Petroleum Corporation 1999 Stock 10.1 to Form 8-K dated December 9, 2005 1-8968
Incentive Plan Performance Unit Agreement
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Exhibit File
†10(xix) Form of Anadarko Petroleum Corporation 1999 Stock 10.2 to Form 8-K dated December 11, 2006 1-8968
Incentive Plan Performance Unit Agreement
† (xx) The Approved UK Sub-Plan of the Anadarko 10(b)(xxiv) to Form 10-K for year ended December 31, 2003 1-8968
Petroleum Corporation 1999 Stock Incentive Plan
† (xxi) Key Employee Change of Control Contract 10(b)(xxii) to Form 10-K for year ended December 31, 1997 1-8968
† (xxii) First Amendment to Anadarko Petroleum Corporation 10(b) to Form 10-Q for quarter ended September 30, 2000 1-8968
Key Employee Change of Control Contract
† (xxiii) Form of Amendment to Anadarko Petroleum 10(b)(ii) to Form 10-Q for quarter ended June 30, 2003 1-8968
Corporation Key Employee Change of Control
Contract
† (xxiv) Employment Agreement—James T. Hackett 10.1 to Form 8-K dated December 11, 2006 1-8968
† (xxv) Letter Agreement regarding Post-Retirement Benefits, 10(b)(xxxiv) to Form 10-K for year ended December 31, 2003 1-8968
dated February 16, 2004—Robert J. Allison, Jr.
† (xxvi) Anadarko Retirement Restoration Plan, effective 10(b)(xix) to Form 10-K for year ended December 31, 1995 1-8968
January 1, 1995
† (xxvii) Anadarko Savings Restoration Plan, effective January 10(b)(xx) to Form 10-K for year ended December 31, 1995 1-8968
1, 1995
† (xxviii) First Amendment to Anadarko Retirement Restoration 10(b)(xxxiii) to Form 10-K for year ended December 31, 2005 1-8968
Plan, effective July 31, 2003
† (xxix) Anadarko Retirement Restoration Plan (As Amended 10.2 to Form 8-K dated November 13, 2007 1-8968
and Restated Effective as of November 7, 2007)
† (xxx) Amendment to Amended and Restated Anadarko 10(b)(xxxi) to Form 10-K for year ended December 31, 1997 1-8968
Savings Restoration Plan, effective January 29, 1998
† (xxxi) Anadarko Petroleum Corporation Estate Enhancement 10(b)(xxxiv) to Form 10-K for year ended December 31, 1998 1-8968
Program
† (xxxii) Estate Enhancement Program Agreement between 10(b)(xxxv) to Form 10-K for year ended December 31, 1998 1-8968
Anadarko Petroleum Corporation and Eligible
Executives
† (xxxiii) Estate Enhancement Program Agreements effective 10(b)(xxxxii) to Form 10-K for year ended December 31, 2000 1-8968
November 29, 2000
143
Table of Contents
Exhibit File
†10(xxxiv) Anadarko Petroleum Corporation Management 10(b)(xxxii) to Form 10-K for year ended December 31, 2002 1-8968
Life Insurance Plan, restated November 1, 2002
† (xxxv) First Amendment to Anadarko Petroleum 10(b)(xliii) to Form 10-K for year ended December 31, 2003 1-8968
Corporation Management Life Insurance Plan,
effective June 30, 2003
† (xxxvi) Management Disability Plan—Plan Summary 10(b)(xxxiii) to Form 10-K for year ended December 31, 2002 1-8968
† (xxxvii) Anadarko Petroleum Corporation Officer 10(b)(iv) to Form 10-Q for quarter ended September 30, 2003 1-8968
Severance Plan
† (xxxviii) Form of Termination Agreement and Release of 10(b)(v) to Form 10-Q for quarter ended September 30, 2003 1-8968
All Claims Under Officer Severance Plan
† (xxxxix) Anadarko Petroleum Corporation Deferred 10(b)(ii) to Form 10-Q for quarter ended September 30, 2004 1-8968
Compensation Plan effective January 1, 2005
† (xl) Director and Officer Indemnification Agreement 10 to Form 8-K dated September 3, 2004 1-8968
† (xli) Summary of Director Compensation 10.1 to Form 8-K dated May 17, 2005 1-8968
† (xlii) Summary of Material Terms of 10.1 to Form 8-K dated August 11, 2005 1-8968
Employment—R. A. Walker
† (xliii) Summary of Material Terms of 10.1 to Form 8-K dated May 4, 2006 1-8968
Employment—Bruce W. Busmire
† (xliv) Retention Agreement between Anadarko 10.1 to Form 8-K dated August 15, 2006 1-8968
Petroleum Corporation and Charles A. Meloy
dated August 10, 2006
† (xlv) Amended and Restated Continuity Agreement, 10.1 to Form 8-K dated June 26, 2006 1-16619
dated as of June 22, 2006, between Kerr-McGee
Corporation and Luke R. Corbett
† (xlvi) Compensatory Arrangements for Certain Officers Form 8-K dated 1-8968
January 17, 2007
(xlvii) $1.3 billion Revolving Credit Agreement, dated as 10.14 to Form S-1 dated April 15, 2008 333-146700
of March 4, 2008, by and among Anadarko
Petroleum Corporation, Western Gas Partners, LP,
JPMorgan Chase Bank, N.A., The Royal Bank of
Scotland, PLC, BNP Paribas, Bank of America,
N.A., BMO Capital Markets Financing, Inc., The
Bank of Tokyo-Mitsubishi UFJ, LTD., and each of
the Lenders named therein.
(xlviii) $2.2 billion Term Loan Agreement, dated as of 10(liv) to Form 10-K for year ended December 31, 2007 1-8968
December 27, 2007, among WGR Asset Holding
Company LLC and Trinity Associates LLC
144
Table of Contents
Exhibit File
10(xlix) Amended and Restated Limited Liability Company 10(lv) to Form 10-K for year ended December 31, 2007 1-8968
Agreement of Trinity Associates LLC, dated as of
December 27, 2007
† (l) Anadarko Petroleum Corporation 2008 Omnibus 10.1 to Form 8-K dated May 20, 2008 1-8968
Incentive Compensation Plan, effective as of May 20,
2008
† *(li) Form of Anadarko Petroleum Corporation 2008 Omnibus
Incentive Compensation Plan Nonqualified Stock
Option Award Letter
† *(lii) Form of Anadarko Petroleum Corporation 2008 Omnibus
Incentive Compensation Plan Restricted Stock Unit
Award Letter
† *(liii) Form of Anadarko Petroleum Corporation 2008 Omnibus
Incentive Compensation Plan Restricted Stock Award
Letter
† (liv) Anadarko Petroleum Corporation 2008 Director 10.2 to Form 8-K dated May 20, 2008 1-8968
Compensation Plan, effective as of May 20, 2008
† (lv) Form of Award Letter for Anadarko Petroleum 10.3 to Form 8-K dated May 20, 2008 1-8968
Corporation 2008 Director Compensation Plan
† *(lvi) Anadarko Petroleum Corporation Benefits Trust
Agreement, amended and restated effective as of
November 5, 2008
(lvii) Sponsor Payment Guaranty, dated as of December 19, 10.1 to Form 8-K dated December 19, 2008 1-8968
2008 made by Anadarko Petroleum Corporation
*12 Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred
Stock Dividends
*21 List of Significant Subsidiaries
*23.1 Consent of KPMG LLP
*23.2 Consent of Miller and Lents, Ltd.
*24 Power of Attorney
*31.1 Rule 13a-14(a)/15d-14(a) Certification—Chief Executive
Officer
*31.2 Rule 13a-14(a)/15d-14(a) Certification—Chief Financial
Officer
*32 Section 1350 Certifications
*99 2008 Report of Miller and Lents, Ltd.
† Management contracts or compensatory plans or arrangements required to be filed pursuant to Item 15.
The total amount of securities of the registrant authorized under any instrument with respect to long-term debt not filed as an exhibit does not
exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the
Securities and Exchange Commission, to furnish copies of any or all of such instruments to the Securities and Exchange Commission.
(b) Financial Statement Schedules Financial statement schedules have been omitted because they are not required, not applicable or the
information is included in the Company’s consolidated financial statements.
145
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
February 24, 2009 By: /s/ R. A. WALKER

(R. A. Walker, Senior Vice
President, Finance and Chief Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated on February 24, 2009.
Name and Signature Title

(i) Principal executive officer:*
JAMES T. HACKETT Chairman of the Board, President and Chief Executive Officer
(James T. Hackett)
(ii) Principal financial officer:
/s/ R. A. WALKER Senior Vice President, Finance and Chief Financial Officer
(R. A. Walker)
(iii) Principal accounting officer:
/s/ M. CATHY DOUGLAS Vice President, Chief Accounting Officer and Controller
(M. Cathy Douglas)
(iv) Directors:*
ROBERT J. ALLISON, JR.
LARRY BARCUS
JOHN R. BUTLER, JR.
LUKE R. CORBETT
H. PAULETT EBERHART
PETER J. FLUOR
JOHN R. GORDON
JAMES T. HACKETT
JOHN W. PODUSKA, SR.
PAULA ROSPUT REYNOLDS
* Signed on behalf of each of these persons and on his own behalf:
By: /s/ R. A. WALKER

(R. A. Walker, Attorney-in-Fact)
146
EXHIBIT 10(li)
ANADARKO PETROLEUM CORPORATION 1201 LAKE ROBBINS DRIVE, THE WOODLANDS, TEXAS 77380
P.O. BOX 1330 HOUSTON, TEXAS 77251-1330 U.S.A. PH. (832)636-1000
LOGO
PERSONAL AND CONFIDENTIAL
[Date]
Dear [Officer]:
The Compensation and Benefits Committee of the Anadarko Petroleum Corporation (the “Company”, including where applicable affiliates of
the Company) Board of Directors has made a nonqualified stock option award (“Options”) to you under the Company’s 2008 Omnibus
Incentive Compensation Plan, as may be amended from time to time (the “Plan”). This option award is subject to all terms and conditions of the
Plan, the summary (prospectus) of the Plan and the provisions of this grant letter. Unless defined herein, capitalized terms shall have the
meaning assigned to them under the Plan. The Plan is available via the Anadarko intranet at the following address:
http://insider/hr/stock_plan.htm.
Effective [Date], you have been granted a nonqualified stock option to buy [Number] Shares at $[Price] per Share. Provided you remain an
Employee until such dates, one-third of this award will vest on [Date]; one-third will vest on [Date]; and the remaining one-third will vest on
[Date]. Any unexercised Options shall expire seven years from date of grant, or on [Date].
Upon vesting, the Options may be exercised in whole or in part by filing a written notice with the Company’s Corporate Secretary at its
corporate headquarters. Such notice shall be in the form specified by the Company. Payments of all amounts due (e.g., Exercise Price and
applicable withholding taxes) shall be made by check payable to the Company, unless the Company has provided that such amounts may be
satisfied in the following manner: (i) all or a portion of the Exercise Price may be paid by delivery of Mature Shares having an aggregate Fair
Market Value (valued as of the date of exercise) that is equal to the amount of cash that would otherwise be required; or (ii) you may pay the
Exercise Price by authorizing a third party to sell Shares (or a sufficient portion of the Shares) acquired upon exercise of the Option and remit to
the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise. No
Shares shall be issued or delivered until full payment of the Exercise Price and applicable withholding taxes, if any, has been made.
Unexercised Options shall expire and be forfeited (without value) to the Company in the event of your termination of employment, unless
otherwise provided below:
(i) Retirement. If you cease to be an Employee by reason of retirement pursuant to a pension or retirement plan of the Company,
you (or, in the event of your death, your legal representative) may, within a period of not more than thirty-six (36) months after the date
of cessation of employment (unless the Options expire earlier by their own terms), exercise the Options if and to the extent they were
exercisable on the date of cessation.
(ii) Death. If your employment with the Company is terminated due to death, any outstanding Options granted to you shall vest and
be immediately exercisable with respect to all or any part of the Options which remain unexercised. Your legal representative or other
person or persons to whom your rights under the Options shall pass to by will or the laws of descent and distribution, may, within a
period of not more than twelve (12) months after the date of death (unless the Options expire earlier by their own terms), exercise the
Options. In the event of your death after termination of employment, your legal representative will have the remaining exercise period
awarded to you by your reason of termination as provided in this agreement or the Plan.
(iii) Disability. If your employment with the Company is terminated due to total disability (as defined in the Company’s Disability
Plan), any outstanding Options granted to you shall vest and be immediately exercisable with respect to all or any part of the Options
which remain unexercised. You (or, in the event of your death, your legal representative) may, within a period of not more than thirty-six
(36) months (unless the Options expire earlier by their own terms) after the date of cessation of employment, exercise the Options.
(iv) Termination Without Cause. If your employment with the Company is terminated by the Company due to a reduction in force,
job abolishment, or at the convenience of the Company, as determined by the Company, you (or, in the event of your death, your legal
representative) may, within a period of not more than three (3) months (unless the Options expire earlier by their own terms) after such
cessation of employment, exercise the Options if and to the extent they were exercisable at the date of such cessation.
(v) Termination following Change of Control. If your employment with the Company is terminated following Change of Control and
you received a benefit under the Key Employee Change of Control Contract, Key Manager Change of Control Contract or the Change of
Control Severance Pay Plan, you (or, in the event of your death, your legal representative) may, within a period of not more than three
(3) months (unless the Options expire earlier by their own terms) after such cessation of employment, exercise the Options if and to the
extent they were exercisable at the date of such cessation.
(vi) Voluntary Termination. If you voluntarily terminate employment with the Company, you (or, in the event of your death, your
legal representative) may, within a period of not more than three (3) months (unless the Options expire earlier by their own terms) after
such cessation of employment, exercise the Options if and to the extent they were exercisable at the date of such cessation.
Notwithstanding anything to the contrary, if you are terminated by the Company as provided in (iv), (v) and (vi) above and you qualify for
retirement under the Company’s retirement plan, you shall be deemed to have terminated because of retirement.
The Options granted hereunder are not transferable except by will or the laws of descent and distribution. Options are exercisable, during your
lifetime, only by you. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Options, or of any right or
privilege conferred hereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the Options or any
right or privilege conferred hereby, the Options and the right and privilege conferred hereby shall immediately become null and void.
You shall have no rights as a stockholder with respect to any Shares subject to the Options prior to the date you are issued a certificate or
certificates for such Shares, or until such shares are recorded on the books of the Company’s stock transfer agent.
Once Options have been exercised and Shares have been delivered to you, you are free to sell, gift or otherwise dispose of such Shares;
provided that you comply with the applicable restrictions under the Company’s Insider Trading Policy (including the receipt of pre-clearance)
and the applicable stock ownership requirements.
If you have any questions on this grant, please call me at [ ].
Sincerely,
EXHIBIT 10(lii)
ANADARKO PETROLEUM CORPORATION 1201 LAKE ROBBINS DRIVE, THE WOODLANDS, TEXAS 77380
P.O. BOX 1330 HOUSTON, TEXAS 77251-1330 U.S.A. PH. (832)636-1000
LOGO
PERSONAL AND CONFIDENTIAL
[Date]
Dear [Officer]:
To encourage Anadarko executives to accomplish the many strategic and financial objectives that are critical to the long-term success of the
Company and to align further the interest of the Anadarko management with its shareholders, the Benefits and Compensation Committee of
the Anadarko Board of Directors approved a grant of restricted stock units (“RSUs”). This grant is subject to all terms and conditions of the
Anadarko Petroleum Corporation 2008 Omnibus Incentive Compensation Plan, as amended from time to time (the “Plan”). The Plan is available
via the Anadarko intranet at the following address: http://insider/hr/stock_plan.htm.
Effective [Date], you will receive a grant of [Number] RSUs, which vest over a period of time. Provided you remain continuously employed
within the Anadarko organization until such dates, one-third of the RSUs will vest on [Date], one-third on [Date], and the remaining one-third
on [Date] (each considered a “Vesting Period”).
At the end of each Vesting Period, the value attributed to the number of RSUs that vest on such date shall be reduced by the applicable
payroll taxes as a result of such vesting, and the resulting amount shall then be converted into shares of unrestricted Anadarko common stock
using the closing price of the Company common stock on the date of such vesting.
Dividend Equivalents shall be paid to you in cash with respect to the RSUs and on a current basis, less applicable withholding taxes. The
RSUs do not have voting rights. They do, however, count toward any stockownership requirements.
You will be allowed to make an election to defer your entire RSU award. All deferral elections and distributions must be made in compliance
with 409A regulations and made on a separate form provided by Anadarko to you.
If you voluntarily terminate your employment, including retirement, or in the event you are terminated for cause, all unvested RSUs and unpaid
RSU Dividend Equivalents will be
immediately forfeited. Upon your death, disability (as defined in the Company’s disability plan), your involuntary termination without cause or
a change of control event (as defined in the Plan) all your unvested RSUs will immediately vest and any unpaid RSU Dividend Equivalents due
but not yet paid will immediately be paid. Your RSUs are subject to several restrictions, including that such RSUs may not be transferred, sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, or disposed of to the extent then subject to restrictions.
Once RSUs have vested and shares of Anadarko common stock have been delivered to you, you are free to sell, gift or otherwise dispose of
such shares; provided that you comply with the applicable restrictions under the Company’s Insider Trading Policy (including the receipt of
pre-clearance) and the applicable stock ownership requirements.
If you have any questions on this grant, please call me at .
Sincerely,
EXHIBIT 10(liii)
LOGO
NAME
ADDRESS
CITY, STATE ZIP
Dear :
As a new employee of Anadarko, we believe that you will make an immediate contribution to the success of the Company and are therefore
pleased to grant you this restricted stock award under the Anadarko Petroleum Corporation 2008 Omnibus Incentive Compensation Plan. This
award represents a valuable component of your total compensation package.
Effective , you were granted Restricted Shares, which vest over a period of time. Provided you remain continuously
employed with Anadarko until such dates, one-third of the restricted shares will vest on [date], one-third on [date], and the remaining one-
third on [date] (each date considered a “Vesting Period”).
This grant is subject to all terms and conditions of the 2008 Omnibus Incentive Compensation Plan (the “Plan”) and the provisions of this
letter. The Plan is available via the Anadarko intranet at the following address: http://insider/hr/stock_plan.htm.
You may elect, at the time restricted stock is granted to you, to treat the fair market value of the restricted stock on the date of grant as
compensation income instead of the value on the date the restrictions lapse. You must make the Section 83(b) election within 30 days from the
date the restricted stock is granted. If you make a Section 83(b) election and the restricted stock is forfeited to Anadarko, you are not allowed
to deduct the amount included as taxable income at a later date. Dividends received on restricted shares after a Section 83(b) election is made
will be treated as dividend income in the year received.
At the end of each Vesting Period, the value attributed to the number of the restricted shares that vests on such date shall be reduced by the
applicable payroll taxes as a result of such vesting. Your net shares will be deposited into a Merrill Lynch brokerage account. Attached is the
information about the Merrill Lynch program.
If you voluntarily terminate your employment, including retirement, or in the event you are terminated for cause, all of your unvested restricted
shares will be immediately forfeited. If you are terminated as a result of death, disability (as defined in the Company’s disability plan),
involuntary termination without cause, or a change of control event (as defined in the Plan), all of your unvested restricted shares will
immediately vest.
Your restricted shares may not be transferred, sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, or disposed of to
the extent then subject to restrictions. You will have voting rights and received dividends during the restricted period. Once your restricted
shares have vested and shares of Anadarko common stock have been delivered to you, you are free to sell, gift or otherwise dispose of such
shares; provided that you comply with the applicable restrictions under the Company’s Insider Trading Policy.
If you have any questions on this grant, please call , Stock Plan Administrator at .
Sincerely,
EXHIBIT 10(lvi)
BENEFITS TRUST AGREEMENT
(AS AMENDED AND RESTATED
EFFECTIVE AS OF NOVEMBER 5, 2008)

TABLE OF CONTENTS
PAGE
ARTICLE 1 5
ESTABLISHMENT AND COMPANY CONTRIBUTIONS 5
1.1 Establishment 5
1.2 Trust Irrevocable 5
1.3 Status of the Trust 5
1.4 Company Contributions 5
1.5 Trustee’s Acceptance 5
1.6 Trust Agreement Given Precedence Over Any Plan Document 6
ARTICLE 2 6
DEFINITIONS 6
2.1 Affiliated Entity 6
2.2 Beneficiary 6
2.3 Board 6
2.4 Change of Control 6
2.5 Code 6
2.6 Company 6
2.7 Current Aggregate Accrued Obligations 6
2.8 Current Year Obligations 6
2.9 Effective Date 6
2.10 ERISA 6
2.11 Insolvency or Insolvent 6
2.12 Investment Manager 7
2.13 Participant 7
2.14 Payment and Obligation Schedule 7
2.15 Trust 7
2.16 Trust Agreement 7
2.17 Trust Fund 7
2.18 Trustee 7
ARTICLE 3 7
PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES 7
3.1 Payment and Obligation Schedule 7
3.2 Company Determination of Benefits 8
3.3 Payment of Benefits by the Company 8
ARTICLE 4 8
PAYMENTS TO COMPANY 8
4.1 Reversions to Company 8
4.2 Restrictions on Reversion 9
ARTICLE 5 9
MANAGEMENT OF THE TRUST FUND 9
i
5.1 The Trust Fund 9

5.2 Investment in Company Securities in the Trust Fund 9
5.3 Investment Substitution 10
5.4 Accounting 10
5.5 Trustee’s General Powers Rights and Duties 11
5.6 Common Fund 13
5.7 Compensation and Expenses 13
5.8 Insurance 13
5.9 Trustee Only Responsible for Assets Received 14
5.10 Carrying on a Business 14
5.11 Proof of Trustee’s Authority 14
5.12 Maintenance of Trust’s Records 14
5.13 Trustee’s Accounting Reports to Company 14
ARTICLE 6 14
INVESTMENT FUNDS AND INVESTMENT MANAGERS 14
6.1 Investment Funds 14
6.2 Investment Managers 15
ARTICLE 7 16
ADMINISTRATION OF THE TRUST 16
7.1 Directions 16
7.2 Expenses of Administration 16
7.3 Accumulation Trust 16
7.4 Investment of Trust Fund 17
7.5 Legal Ownership 17
7.6 Denial of Claim 17
7.7 Arbitration 19
7.8 Missing Persons 19
ARTICLE 8 19
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT 19
8.1 Insolvency 19
8.2 Claims of General Creditors 20
8.3 Resumption of Payments to Participants 21
ARTICLE 9 21
RESIGNATION OR REMOVAL OF TRUSTEE 21
9.1 Resignation or Removal of Trustee 21
9.2 Successor Trustee 21
9.3 Duties of Predecessor Trustee and Successor Trustee 21
ARTICLE 10 22
EFFECT OF CHANGE OF CONTROL 22
10.1 Potential Change of Control 22
10.2 Change of Control 22
ii
10.3 Funding Upon a Change of Control 23

10.4 Elimination of Investment Restrictions and Changes to Article 6 Upon a Change of Control 23
10.5 Amendment of Trust Agreement Without Consent of Participants 24
10.6 Amendment of Trust Agreement With Consent of Participants 24
10.7 Additional Participants 24
10.8 Notification of Potential Change of Control or a Change of Control 24
ARTICLE 11 25
AMENDMENT OR TERMINATION 25
11.1 Amendment 25
11.2 Termination 25
11.3 Duration 26
11.4 Distribution upon Termination 26
11.5 Consolidation or Merger of the Company 26
ARTICLE 12 26
LIABILITY AND INDEMNIFICATION 26
12.1 Liabilities Mutually Exclusive 26
12.2 Indemnification 26
12.3 Trustee’s Actions Conclusive 27
ARTICLE 13 27
MISCELLANEOUS 27
13.1 Severability 27
13.2 Nonalienation 27
13.3 Governing Law 27
13.4 Evidence 27
13.5 Notice and Waiver of Notice 27
13.6 Counterparts 28
13.7 Gender and Number 28
13.8 Scope of this Agreement 28
13.9 Statutory References 28
13.10 Merger of Trustee 28
13.11 Construction 28
13.12 Situs 28
13.13 Trust Not an Employment Contract with Participants 28
13.14 Spendthrift Provisions 29
iii
BENEFITS TRUST AGREEMENT
THIS BENEFITS TRUST AGREEMENT (“Agreement”) was originally entered into on the 15th day of May of 1995, by and between
Anadarko Petroleum Corporation, a Delaware corporation (the “Company”) and Wachovia Bank of North Carolina, N.A., currently Wachovia
Bank, National Association, (the “Trustee”), as the “Anadarko Petroleum Corporation Executives and Directors Benefits Trust Agreement”,
and is now hereby amended, restated and renamed as the “Anadarko Petroleum Corporation Benefits Trust Agreement”, effective as of
November 5, 2008 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, the Company has adopted the nonqualified deferred compensation plans, employment agreements and other arrangements
listed in Appendix A to this Agreement and may hereafter adopt, amend and add to Appendix A any additional nonqualified deferred
compensation plans, employment agreements or other arrangements that are intended to provide certain benefits to (i) a select group of
management or highly compensated employees for purposes of certain exemptions provided under Title I of ERISA (as herein defined) and
(ii) directors of the Board (as herein defined) (collectively, the “Plans”, individually a “Plan”); and
WHEREAS, the Company has incurred or expects to incur liability under the terms of the Plans with respect to the individuals and/or
their Beneficiaries (as herein defined) who are Participants (as herein defined) in such Plans (including individuals who are no longer employed
with the Company but who continue to have a right to receive benefits under a Plan); and
WHEREAS, the Company desires to continue to be the grantor of the Trust (as herein defined) and to contribute assets to the Trust that
shall be held therein, subject to the claims of the Company’s creditors in the event of the Company’s Insolvency (as herein defined) until paid
to Participants in such manner and at such times as specified in the Plans; and
WHEREAS, it is the intention of the parties that the Trust shall not affect the status of the Plans as unfunded plans maintained to
provide nonqualified deferred compensation for (i) a select group of management or highly compensated employees for purposes of Title I of
ERISA and (ii) directors of the Board; and
WHEREAS, the Company has agreed to take steps to assure that the future payment of all amounts due under the Plans will not be
improperly withheld in the event that a Change of Control (as herein defined) of the Company should occur; and
WHEREAS, for purposes of assuring that such payments will not be improperly withheld, the Company desires to deposit with the
Trustee, subject to the claims of the Company’s existing or future general creditors in the event of Insolvency, cash and other property
contributions for the payment of the fees and expenses of the Trust and benefits due under the Plans;
4
NOW, THEREFORE, the parties do hereby amend and restate the Agreement under the form of this document, without a gap or lapse in
the continuation of the Trust, as follows:
ARTICLE 1
ESTABLISHMENT AND COMPANY CONTRIBUTIONS
1.1 Establishment. The Company has deposited, and may make additional deposits, with the Trustee in Trust such cash or other
property as it deems appropriate, which shall be held, administered and disposed of by the Trustee as provided in this Agreement.
1.2 Trust Irrevocable. The Trust shall be irrevocable and shall be held for the exclusive purpose of providing benefits under a Plan
to Participants and defraying the Trust’s expenses in accordance with the provisions of this Trust Agreement. No part of the income or corpus
of the Trust Fund shall be recoverable by the Company, except as provided in Section 4.1.
1.3 Status of the Trust. The Trust is intended to be a grantor trust under Sections 671-677 of the Code, and the Company, as
grantor, shall be the “owner” within the meaning of those provisions. The Company shall file its federal income tax returns in a manner
consistent with those provisions of the Code. The Trust Agreement shall also be construed in a manner consistent with such provisions. The
principal of the Trust, and any earnings thereon, shall continue to be assets of the Company but held separate and apart from other funds of
the Company and shall be used exclusively as herein set forth. Participants shall have no preferred claim on, or any beneficial ownership
interest in, the Trust. Any rights created under any Plan and this Agreement shall be mere unsecured contractual rights of Participants against
the Company. The Trust will be subject to the claims of the Company’s general creditors under federal and state law in the event of
Insolvency. All interest and other income earned on the investment of the Trust Fund shall be the property of, and taxable to, the Company.
All taxes on or with respect to the Trust shall be payable by the Company from separate funds and shall not be a charge against the Trust.
1.4 Company Contributions. From time to time in its discretion, the Company shall contribute cash or other property as deemed
appropriate by the Company to the Trust to be held, administered and disposed of by the Trustee as provided in this Agreement. Except as
specifically provided in this Agreement, neither the Trustee nor any Participant shall have any right to compel the Company to make
contributions to the Trust. Once contributed to the Trust, the assets shall immediately become subject to the terms and provisions of this
Agreement.
1.5 Trustee’s Acceptance. The Trustee accepts its duties and obligations as Trustee hereunder, agrees to accept delivery of cash
and other property delivered to it by the Company pursuant to this Agreement, and agrees to hold such cash and other property and any
5
proceeds from the investment of such assets to the extent not returned or paid by the Trust to the Company pursuant to Article 4 in Trust, in
accordance with the terms and conditions of this Agreement.
1.6 Trust Agreement Given Precedence Over Any Plan Document. In the event of a conflict between the terms and provisions of
the Trust Agreement and those of any Plan document, the Trust Agreement shall be given precedence. To the full extent possible, the terms
and provisions of any Plan document and those of the Trust Agreement shall be interpreted as mutually consistent.
ARTICLE 2
DEFINITIONS
2.1 Affiliated Entity. “Affiliated Entity” means an entity that is affiliated by common ownership or control with the Company, as
determined by the Company.
2.2 Beneficiary. “Beneficiary” means the person or entity designated under a Plan to receive benefits in the event of the death of
the Participant.
2.3 Board. “Board” means the Board of Directors of the Company.
2.4 Change of Control. “Change of Control” means a change of control of the Company, as defined in Section 10.2.
2.5 Code. “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and other authority issued
thereunder by the appropriate governmental authority.
2.6 Company. “Company” means Anadarko Petroleum Corporation, and any successor thereto.
2.7 Current Aggregate Accrued Obligations. “Current Aggregate Accrued Obligations” shall have the meaning ascribed to such
term in Section 3.1.
2.8 Current Year Obligations “Current Year Obligations” shall have the meaning ascribed to such term in Section 3.1.
2.9 Effective Date. “Effective Date” means the effective date of this amendment and restatement of the Trust Agreement, as
specified in the first paragraph hereof.
2.10 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and other
authority issued thereunder by the appropriate governmental authority.
2.11 Insolvency or Insolvent. “Insolvency” or “Insolvent” means that the Company is (a) unable to pay its debts as they mature or
(b) is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.
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2.12 Investment Manager. “Investment Manager” means, as defined in Section 3(38) of ERISA, a person, or the agent of such
person, which may include an individual, corporation or other entity, who is not a Trustee, is designated by the Company, and (a) has
acknowledged that it is a fiduciary with respect to the Trust Fund, (b) has the power to manage, acquire or dispose of any asset or all or any
portion of the Trust Fund, and (c) is (i) registered as an investment advisor under the Investment Advisors Act of 1940, (ii) a bank (as defined
in the Investment Advisors Act of 1940), or (iii) an insurance company which is qualified to manage, acquire and dispose of assets of a trust
under the laws of more than one state.
2.13 Participant. “Participant” means (a) any member or former member of the Company’s Board who is participating in a Plan, or
who is not currently participating or accruing benefits thereunder but who is eligible to receive benefits under a Plan in accordance with its
provisions; (b) any employee or former employee of the Company or an Affiliated Entity who is participating in a Plan, or any active employee
who is eligible to receive benefits under a Plan in accordance with its provisions; (c) a Beneficiary in the event of the death of such member of
the Board or employee or former member of the Board or employee, or (d) any other person who is entitled to benefits under the terms of a Plan
such as, for example, an alternate payee under a qualified domestic relations order as defined in Section 414(p) of the Code.
2.14 Payment and Obligation Schedule. “Payment and Obligation Schedule” shall have the meaning ascribed in Section 3.1.
2.15 Trust “Trust” means the trust created under this Agreement, as it is maintained and administered pursuant to the terms and
provisions of the Trust Agreement.
2.16 Trust Agreement “Trust Agreement” or “Agreement” means this declaration of trust, as it may be amended from time to time.
2.17 Trust Fund. “Trust Fund” means any and all property transferred to the Trustee and held by the Trustee in the Trust,
including the investments thereof.
2.18 Trustee. “Trustee” means the trustee or trustees qualified and acting hereunder, or any successor or successors as appointed
and serving in accordance with this Trust Agreement.
ARTICLE 3
PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
3.1 Payment and Obligation Schedule. The Company may deliver, either at the beginning of each calendar year or, if prepared by a
third party, as soon as practicable after receipt by the Company, to the Trustee a schedule for each Plan (the “Payment and Obligation
Schedule”) that indicates:
(a) the amounts payable with respect to each Participant during such calendar year, the form in which such amount is to be paid (as
provided for or available under the Plans), and the time of commencement and termination for payment of such amounts (the “Current
Year Obligations”); and
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(b) the present value (the “Current Aggregate Accrued Obligations”) as of the December 31 immediately preceding the calendar
year for which the Payment and Obligation Schedule is being prepared of the Company’s future obligations under the Plans to all then
Participants based upon their service with “the Company as of such” December 31 and their compensation and other factors relevant to
such present value determination as of such December 31.
3.2 Company Determination of Benefits. The entitlement of a Participant to benefits under any Plan shall be determined by the
Company, and any claim by a Participant for such benefits shall be pursuant to the terms of each specific Plan.
3.3 Payment of Benefits by the Company. The Company may make payment of benefits directly to Participants as they become due
under the terms of the Plans. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time
amounts are payable to Participants by the Trustee. The Company may direct the Trustee in writing to reimburse the Company from the Trust
for Plan benefits paid directly to a Participant by the Company.
If for any reason the Company does not make payment of benefits directly to Participants as they become due under the terms of
the Plans, the Trustee shall make such payments from the Trust in accordance with the Payment and Obligation Schedule, provided that the
Trustee shall only pay in any calendar year the Current Year Obligations for such calendar year. The Trustee shall promptly notify the
Company of each such payment.
If payments are being made by the Trustee from the Trust to Participants and the assets of the Trust are insufficient to make all
payments of benefits in accordance with the terms of the Plans, the Company shall make the balance of each such payment as it becomes due
and payable. The Trustee shall promptly notify the Company when the assets of the Trust Fund are insufficient.
ARTICLE 4
PAYMENTS TO COMPANY
4.1 Reversions to Company. Prior to a Change of Control, if it is determined at the end of any calendar year that the value of the
Trust is greater than one hundred percent (100%) of then Current Aggregate Accrued Obligations under the Plans, the Company may direct,
and the Trustee shall return to the Company, such excess assets within ten (10) days of such direction, so as to reduce the net assets of the
Trust to no less than one hundred percent (100%) of the then Current Aggregate Accrued Obligations.
Following a Change of Control, if it is determined at the end of any calendar year that the value of the Trust is greater than one
hundred twenty-five percent (125%) of then
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Current Aggregate Accrued Obligations under the Plans, the Company may request and the Trustee, upon its sole determination, may return
to the Company within twenty (20) days of such request, such excess assets so as to reduce the net assets of the Trust to no less than one
hundred twenty-five percent (125%) of the then Current Aggregate Accrued Obligations.
4.2 Restrictions on Reversion. Except as provided in this Article 4, the Company shall have no right or power to direct the Trustee
to return to the Company or to divert to others any of the assets in the Trust before payment of all benefits have been made to Participants
pursuant to the terms of the Plans.
ARTICLE 5
MANAGEMENT OF THE TRUST FUND
5.1 The Trust Fund. The Trust Fund shall consist of all cash and other property acceptable to and received by the Trustee, plus
any investment earnings or gains on such assets and less any investment loss or expense, benefit or disbursement paid pursuant to this
Agreement. The Trustee may use a general disbursement account for distributions from the Trust without incurring any liability for payment of
interest thereon, provided that the funds do not remain uninvested for an unreasonable time period, notwithstanding the Trustee’s receipt of
credit or interest in respect of funds held in such disbursement account.
5.2 Investment in Company Securities in the Trust Fund. If shares of securities (including stock or rights to acquire stock) or
obligations issued by the Company are contributed to the Trust, the Trustee shall have neither the right nor the power to sell or otherwise
dispose of such securities without the express written consent of the Company, except for purposes of paying benefits to Participants and
defraying the ordinary and necessary expenses of the Trust. Subject to applicable law and consistent with maintaining an effective tax deferral
of Participant benefits, in the event that the Trust Fund holds voting securities of the Company, the Trustee, in its discretion, may solicit
voting preferences from certain Participants with respect to matters that are to be presented to the Company’s common stockholders;
provided, however, in all events, the Trustee shall retain the full discretion and authority to vote such Company voting securities as it deems
appropriate regardless of voting preferences indicated by any Participant, or only if requested by the Trustee, as the Company or its delegate
may direct.
(a) Registration. With respect to any investment of the assets in the Trust consisting of shares of the common stock of the
Company (“Shares”), the Company shall promptly prepare, and shall file with the Securities and Exchange Commission within sixty
(60) calendar days after the date the Company receives a request from the Trustee, in writing, to register the Shares, a registration
statement on Form S-3 under the Securities Act of 1933, as amended (the “1933 Act”). The Company and the Trustee, as applicable, shall
use their best efforts to cause such registration statement to become effective as promptly as practicable. The Company shall (i) bear the
expenses of such compliance with the 1933 Act and (ii) use its best efforts to maintain the effectiveness of such registration statement
for at least thirty-six (36) months after the effective date of
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registration statement (the “Initial Effectiveness Period”) and any subsequent thirty-six (36) month period following the Initial
Effectiveness Period (the “Subsequent Effectiveness Period”) so long as the Shares are still held in the Trust. If prior to the last day of
the Initial Effectiveness Period or any Subsequent Effectiveness Period, the Shares are still held by the Trust, the Company will file a new
registration statement on Form S-3 (or such other applicable registration form as may be required) under the 1933 Act prior to the end of
such period. In the event that the Company cannot legally maintain the effectiveness of such registration statement at any time during
the Initial Effectiveness Period or any Subsequent Effectiveness Period, the Company shall take such other reasonable steps as may be
appropriate to permit the Trustee to distribute the Shares in compliance with the 1933 Act. The Trustee shall use its best efforts to
comply with the 1933 Act and the rules and regulations promulgated thereunder in connection with any transfer or distribution by it of
the Shares.
(b) Trading. The Company shall use its best efforts to have the Shares included in the shares of common stock of the Company
listed on the New York Stock Exchange or on such other national stock exchange that the Company’s Shares are listed.
(c) Certificate Legend. Each certificate or book entry account representing any of the Shares may bear such legends, summaries or
endorsements as the Company may reasonably deem appropriate and not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law or governmental rule or regulation, or any applicable rule or regulation of the New York
Stock Exchange or other exchange on which the shares are listed for trading. If requested by the Trustee, the Company shall cause any
such legend to be removed promptly if at the time removal is permitted by such laws, rules or regulations.
5.3 Investment Substitution. The Company shall have the right at any time, and from time to time in its sole discretion, to substitute
assets of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without
the approval or consent of any person in a fiduciary capacity.
5.4 Accounting. The Company may direct the Trustee to maintain separate recordkeeping accounts for specific Plans or for all the
Plans, in the name of each Participant which, pursuant to the rules established by the Company, will reflect with respect to each Participant:
(a) Deposits made by the Company to the Trust Fund;
(b) Income, losses, and appreciation or depreciation in the value of Trust assets resulting from the investment of the Trust Fund;
(c) Payments made from the Trust Fund to Participants; and
(d) Any other amounts charged to the accounts or accrued benefits of Participants, such as investment expenses.
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As of the end of each Plan Year, such accounts shall be appropriately adjusted in accordance with such rules to reflect the then net
worth of the Trust Fund, as determined as of that Plan year end by the Trustee and reported to the Company. The value of all deferrals and
earnings thereon shall be identified for each Plan and for each Participant in any Plan, on a schedule prepared by the Trustee and delivered to
the Company upon a mutually agreed time schedule.
5.5 Trustee’s General Powers Rights and Duties. With respect to the Trust Fund and subject only to the limitations expressly
provided in this Agreement or imposed by applicable law, the Trustee shall have the following powers, rights, and duties in addition to those
vested in it elsewhere in this Agreement or by law:
(a) To invest and reinvest part or all of the Trust Fund in any real or personal property (including investments in any stocks, bonds,
debentures, mutual fund shares, notes, commercial paper, treasury bills, options, commodities, futures contracts, partnership interests,
venture capital investments, any common, commingled, or collective trust funds, or pooled investment funds, any interest-bearing
deposits held by any bank or similar financial institution, and any other real or personal property), and to diversify such investments so
as to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so;
(b) To retain in cash such amounts as the Trustee considers advisable and as are permitted by applicable laws and to deposit any
cash so retained in any depository (including any bank acting as trustee) which the Trustee may select;
(c) To manage, sell, insure, and otherwise deal with all real and personal property held by the Trustee on such terms and conditions
as the Trustee shall decide;
(d) To vote stock and other voting securities directly or by proxy (and to delegate the Trustee’s powers and discretion with respect
to such stock or other voting securities to any such proxy), to exercise subscription, conversion, and other rights and options (and make
payments from the Trust Fund in connection therewith), to take any action and to abstain from taking any action with respect to any
reorganization, consolidation, merger, dissolution, recapitalization, refinancing, and any other program or change affecting any property
constituting a part of the Trust Fund (and in connection therewith to delegate the Trustee’s discretionary powers and to pay
assessments, subscriptions, and other charges from the Trust Fund), to hold or register any property from time to time in the Trustee’s
name or in the name of a nominee or to hold it unregistered and, with the approval of the Company, to borrow from anyone, including
any bank acting as trustee, to the extent permitted by law, such amounts from time to time as the Trustee considers desirable to carry out
this Trust (and to mortgage or pledge all or part of the Trust Fund as security);
(e) When directed by the Company or by any Investment Manager to acquire, retain, or dispose of such investments as the
Company directs in accordance with this Agreement (following a Change of Control, the Company’s right to direct the Trustee under this
subsection (e) shall cease);
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(f) To make payments from the Trust Fund to provide benefits that have become payable under the Plans pursuant to direction from
the Company, or that are required to be made to the general creditors of the Company as set forth in Section 8.2;
(g) With the prior written notice to the Company, to begin, maintain, or defend any litigation reasonably necessary in connection
with the administration of the Trust, and the Company shall indemnify the Trustee against all reasonable expenses and liabilities
sustained by the Trustee by reason of such litigation unless resulting from the negligence or intentional misconduct of Trustee;
(h) To withhold, if the Trustee considers it advisable, all or any part of any payment required to be made hereunder as may be
deemed necessary and proper to protect the Trustee or the Trust Fund against any liability or claim on account of any estate,
inheritance, income or other tax, or assessment attributable to any amount payable hereunder, and to discharge any such liability with
any part or all of such payment so withheld, provided that at least ten (10) days prior to discharging any such liability with any amount
so withheld, the Trustee shall notify the Company in writing of the Trustee’s intent to do so;
(i) To maintain records reflecting all receipts and payments under this Agreement and such other records as the Company specifies
and the Trustee agrees to, which records may be audited from time to time by the Company or anyone named by the Company;
(j) To report to the Company as of each calendar year end, and at such other times as the Company may request, the then net worth
of the Trust Fund (i.e., the fair market value of the Trust Fund, less liabilities known to the Trustee, other than liabilities to Participants
and amounts payable from the Trust Fund to creditors who are not entitled to benefits under the Plans), on the basis of such data and
information as the Trustee considers reliable;
(k) To furnish periodic accounts to the Company for such periods as the Company may specify, showing all investments, receipts,
disbursements, and other transactions involving the Trust Fund during the applicable period and the assets of the Trust Fund held at
the end of the period;
(l) To furnish the Company with such information in the Trustee’s possession as the Company may need for tax or other purposes.
The Company shall pay, prepare, file, and furnish all Federal, state, and local tax deposits, returns, and reports required by any
government agency or authority;
(m) With the prior written notice to the Company, to employ agents, attorneys, accountants, and other persons (who also may be
employed by the Company, the Trustee, or others), to delegate discretionary powers to such persons, and to reasonably rely upon
information and advice furnished by such persons; provided that each such delegation and the acceptance thereof by each such person
shall be in writing; and, provided further, that the Trustee may not delegate its responsibilities as to the management or control of the
Trust Fund;
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(n) To perform all other acts which, in the Trustee’s judgment, are appropriate for the proper management, investment, and
distribution of the Trust Fund to the extent such duties have not been assigned to others as provided herein; and
(o) To invest in securities (including stock or rights to acquire stock) or obligations issued by the Company and, in such event, all
rights associated with assets of the Trust shall be exercised by Trustee or person designated by Trustee, and shall in no event be
exercisable by or remain with Participants.
The Trustee shall not be either individually or severally liable for any taxes of any kind levied or assessed under the existing or
future laws against the Trust Fund. With respect to payments made by the Trustee, the Trustee shall be responsible for (i) reporting and
withholding any federal, state, or local taxes that may be required to be withheld with respect to a payment; (ii) furnishing to each person
receiving payment or distribution from the Trust, appropriate tax information evidencing such payment or distribution and the amount thereof;
and (iii) providing to the Company the necessary information for preparing and filing all information reports and tax returns required to be filled
with any Federal, state, or local government agency or authority with respect to any payments made to any Participant hereunder. To the
extent that any taxes are payable by the Trust to any federal, state, or local taxing authorities on account of earnings on Trust assets, the
Company shall pay such taxes from its assets other than the Trust Fund.
5.6 Common Fund. The Trustee shall not be required to make separate investments of the Trust Fund for Participants in the
absence of direction by the Company, and may administer and invest the deposits made to the Trust by the Company as to all Plans as one
Trust Fund. The Trustee also shall not be required to make any separate investments of the Trust Fund for the account of any general creditor
of the Company prior to receipt of directions to make payments to such creditor in accordance with Section 8.2.
5.7 Compensation and Expenses. Reasonable compensation as may be agreed in writing upon from time to time between the
Company and the Trustee, and all expenses (except those specifically described in the next sentence) reasonably incurred by the Trustee and
the Company in the administration of this Trust, including compensation to agents, actuaries, attorneys, accountants, and other persons
employed by the Trustee or the Company, as certified by them, shall be paid by the Company directly. Expenses solely attributable to
investment of the Trust Fund (such as Investment Manager fees, load or other commission fees, brokerage, postage, express or insurance
charges, and stock transfer stamps expense) shall be paid from the Trust Fund to the extent not paid directly by the Company.
5.8 Insurance. The Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to
name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy.
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5.9 Trustee Only Responsible for Assets Received. The Trustee shall be responsible only for assets actually received by it as
Trustee, and shall have no duty to compute amounts to be contributed. Any property acquired by the Trustee through the enforcement or
compromise of any claim it has as Trustee will become part of the assets of the Trust Fund.
5.10 Carrying on a Business. Notwithstanding any powers granted to the Trustee pursuant to this Agreement or to applicable
law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom,
within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code.
5.11 Proof of Trustee’s Authority. All persons dealing with the Trustee are entitled to rely upon the representations of the Trustee
as to its authority and are released from any duty to inquire into its authority for taking or omitting any action or to verify that any money paid
or other property delivered to the Trustee is used by the Trustee for Trust purposes. Any action of the Trustee under the Trust Agreement
shall be conclusively evidenced for all purposes by a certificate or other document signed by the Trustee, and any such certificate or
document shall be evidence of the facts recited in it. All persons shall be protected when acting or relying upon any notice, resolution,
instruction, direction, order, certificate, opinion, letter, telegram or other document reasonably believed by such persons to be genuine, to
have been signed by the Trustee, and to be the act and deed of the Trustee.
5.12 Maintenance of Trust’s Records. The Trustee shall keep such records as it considers necessary or appropriate for Trust
administration. The Trustee’s books and records of the Trust Fund shall be open to inspection by the Company or its designee at any time
during regular business hours of the Trustee.
5.13 Trustee’s Accounting Reports to Company. Within sixty (60) days after the close of each calendar year, or within sixty
(60) days after the date of the removal or resignation of the Trustee, and at such other times as may be agreed upon by the Company and the
Trustee, the Trustee shall render to the Company a periodic account statement of its operation of the Trust Fund covering the period since the
previous statement. The Company may approve such account by an instrument in writing delivered to the Trustee. In the absence of the
Company’s filing with the Trustee objections to any such account within sixty (60) days after its receipt, the Company shall be deemed to have
approved such account.
ARTICLE 6
INVESTMENT FUNDS AND INVESTMENT MANAGERS
6.1 Investment Funds. The Company may direct the Trustee to establish one or more separate investment accounts within the
Trust Fund, each separate account being referred to herein as an “Investment Fund”. The Trustee shall transfer to each Investment Fund such
portion of the assets of the Trust Fund as the Company directs.
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The Trustee shall be under no duty to question, and shall not incur any liability on account of following, any direction of the
Company. The Trustee shall be under no duty to review the investment guidelines, objectives and restrictions established, or the specific
investment directions given by the Company for any Investment Fund, or to make suggestions to the Company in connection therewith. To
the extent that directions from the Company to the Trustee represent investment elections of the Participants, the Trustee shall have no
responsibility for such investment elections and shall incur no liability on account of investing the assets of the Trust Fund in accordance
with such directions.
All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of
securities or other property held in, an Investment Fund shall be credited to and reinvested in such Investment Fund. All expenses of the
Trust Fund which are allocable to a particular Investment Fund shall be so allocated and charged. Subject to the provisions of the Plans, the
Company may direct the Trustee to eliminate an Investment Fund or Funds, and the Trustee shall thereupon dispose of the assets of such
Investment Fund and reinvest the proceeds thereof in accordance with the directions of the Company.
6.2 Investment Managers. The Company may appoint one or more Investment Managers to direct the investment and reinvestment
of all or a portion of the Trust Fund or an Investment Fund (hereinafter referred to as an “Investment Account”). If an Investment Manager is
appointed, the Trustee shall be subject to all proper directions made in accordance with this Trust Agreement and applicable law. To the extent
that Trust assets are to be managed by the Investment Manager, such assets shall be segregated and separately accounted for in accordance
with applicable provisions of the Trust Agreement. An Investment Manager may be an affiliate of the Trustee provided that such appointment
does not violate any law or regulation.
Any Investment Manager may be removed by the Company and, in the event of removal, the Investment Manager shall, as soon as
practicable, return custody of all assets managed by it to the Trustee or to any successor Investment Manager, as directed, and make a full
accounting report to the Company with respect to all the assets that it managed, within 30 days from the date of its removal. The Company
shall notify the Trustee in writing before the effectiveness of the appointment or removal of any Investment Manager.
The Company shall furnish the Trustee with written notice of the appointment of each Investment Manager hereunder, and of the
termination of any such appointment. Such notice shall specify the assets which shall constitute the Investment Account. The Trustee shall
be fully protected in relying upon the effectiveness of such appointment and the Investment Manager’s continuing satisfaction of the
requirements set forth above until it receives written notice from the Company to the contrary.
The Company shall provide each Investment Manager appointed with respect to an Investment Fund with the investment
guidelines for that fund and with any modifications in such investment guidelines made from time to time. Notwithstanding the fact that an
Investment Manager may be appointed with responsibility for the management of an Investment Fund, the Trustee shall have the
responsibility for the investment of cash balances held by it from time to
15
time as a part of such investment fund in short-term cash equivalents (such as short-term commercial paper, treasury bills, money market
mutual funds and similar investments, and for this purpose, the Trustee may invest in any appropriate common, commingled or collective
short-term investment fund). In addition, the Trustee shall have the power, right and duty to sell any such short-term investments as may be
necessary to carry out the instructions of the Investment Manager with respect to the investment of the investment fund.
The Trustee shall conclusively presume that each Investment Manager, under its investment management agreement, is entitled to
act, in directing the investment and reinvestment of the Investment Account for which it is responsible, in its sole and independent discretion
and, without limitation, except for any limitations which from time to time the Company and the Trustee agree (in writing) shall modify the
scope of such authority. The Trustee shall have no liability:
(a) For following directions, including investment directions of an Investment Manager or the Company, which are given in
accordance with this Trust Agreement; or
(b) For any loss of any kind which may result by reason of errors made by the Investment Manager or the Company in the division
of the Trust Fund or Investment Fund into Investment Accounts.
An Investment Manager shall certify, at the request of the Trustee, the value of any securities or other property held in any
Investment Account managed by such Investment Manager, and such certification shall be regarded as a direction with regard to such
valuation. The Trustee shall be entitled to conclusively rely upon such valuation for all purposes under this Trust Agreement. The Trustee
shall have the right to request that some part or all of the directions made by an Investment Manager be in writing.
ARTICLE 7
ADMINISTRATION OF THE TRUST
7.1 Directions. Directions from or on behalf of the Company (or its delegate) shall be communicated to the Trustee or the Trustee’s
designee only in the manner and in accordance with procedures established by the Company that are acceptable to the Trustee.
7.2 Expenses of Administration. Expenses incurred by the Company, or by any Investment Manager, or any other persons or
entities designated to act on behalf of the Company, including reimbursement of expenses incurred in the performance of their respective
duties, shall be paid from the Trust unless paid directly by the Company.
7.3 Accumulation Trust. The Trust shall be an accumulation trust, and its principal and income shall be accumulated during the
term of the Trust. The Trustee shall hold, preserve, manage, administer, invest and reinvest the assets of the Trust, collect the income
therefrom and, after deducting all reasonable charges and expenses properly payable therefrom, hold and distribute such principal and income
in accordance with the provisions of the Trust Agreement and any applicable Plan.
16
7.4 Investment of Trust Fund. The assets of the Trust shall be held and administered as a single Trust Fund. To this end, all assets
of the Trust Fund shall be invested and reinvested in the manner provided herein. The Company (or its delegate) and/or one or more
Investment Managers shall manage the investment of the Trust. The Trustee shall invest the Trust as directed, and the Trustee shall have no
discretionary control over, nor any other discretion regarding, the investment or reinvestment of any asset of the Trust.
7.5 Legal Ownership. The Trustee shall be vested with legal ownership of the assets constituting the Trust Fund. No Participant
shall have any claim to or interest in a specific asset of the Trust Fund as a result of any manner of accounting for a Participant’s interest in the
Trust or any Plan.
7.6 Denial of Claim. Except as described in this Section 7.6, Participants shall have no right or power to direct or otherwise cause
the Trustee to directly pay to them any benefits under any Plan. The Participants shall have only those rights provided in the Plans and this
Agreement against the Company in the event that the Company fails or refuses to pay benefits under any Plan.
(a) If a payment under the terms of a Plan has not been made to a Participant who believes that such payment is due and owing,
then no later than ninety (90) days after the latest date upon which the payment could have been timely made in accordance with the
terms of the applicable Plan (or such later date that is considered to be prompt and reasonable, good faith effort to collect such payment
under Code Section 409A), the Participant shall file with the Company a written demand for payment of such benefit. To the extent that
the Plan in issue provides for a benefits claim process, such demand must conform with the requirements and procedures of such claims
process under the particular Plan. Upon receipt of such demand for payment and within the time requirements of any applicable claim
process provided in a Plan or, if none, within thirty (30) calendar days of receipt of such demand for payment, the Company shall
respond to the Participant in writing setting forth its decision to grant, deny or modify the Participant’s benefit claim. Any denial or
modification of a Participant’s benefit claim shall set forth the reasons for the Company’s decision with specific reference to pertinent
Plan provisions. Such denial or modification of a Participant’s benefit shall constitute a “Denial” under this Agreement and the Plan. If,
after having made a timely demand, the payment has not been paid to the Participant, the Participant shall have 180 days after the latest
date upon which the payment could have been timely made in accordance with the terms of the applicable Plan (or such later date that is
considered to be prompt and reasonable, good faith effort to collect such payment under Code Section 409A), to take further
enforcement measures or the claim will be completely and forever forfeited.
(b) If a Denial has occurred with respect to benefits and a Participant desires to appeal such Denial, such Participant must notify the
Trustee in writing describing the facts and circumstances relating to such Denial. The Participant shall provide a copy of such notice to
the Company. The Company may provide the Trustee with an explanation
17
regarding the alleged improper Denial, but the final determination as to whether an improper Denial has occurred shall be made by the
Trustee. If the Trustee determines that an improper Denial has occurred, the Trustee shall direct the Company to tender payment to the
Participant of the benefits that were subject to such Denial. A determination by the Trustee regarding an alleged improper Denial shall be
final unless, prior to a Change of Control, the Company or the Participant invokes arbitration pursuant to Section 7.7 within sixty
(60) calendar days of the date of the Trustee’s decision (the “Appeal Period”). Following a Change of Control, the rights of a Participant
or the Company to invoke arbitration shall cease. The Company shall be responsible for all reasonable costs of the Trustee in
determining whether or not an improper Denial has occurred.
(c) In the event that neither the Company nor the Participant commences arbitration during the Appeal Period, the Company shall
have fifteen (15) calendar days following a decision by the Trustee that an improper Denial has occurred regarding a Participant’s
benefits under a Plan to tender payment of such benefits due and payable. Following a decision by the arbitrator panel pursuant to
Section 7.7 that an improper Denial has occurred and benefits are owed under a Plan, the Company shall have fifteen (15) calendar days
to tender full payment of benefits due and payable. A failure or refusal by the Company to tender such payment within such 15-day
period or, in the case of any continuing series of payments, to tender any such payment thereafter required within 15 calendar days of
the date it is due, shall constitute a “Refusal to Pay.” In the event of a Refusal to Pay, the Trustee shall establish a separate account
under the Trust for such Participant and credit thereto an amount that is equal to 100% of the Current Year Obligations of such
Participant under the Plan (or Plans) for which the Refusal to Pay occurred. Thereafter, the Trustee shall pay from such separate account
to such Participant the benefits he is entitled to receive under the Plan for which such separate account was established. After any
separate account is established under the Trust for the benefit of a Participant, none of the assets credited to such separate account
shall be available for, or used to pay, Plan benefits to any other Participant.
As of the first day of each calendar year, the Trustee shall determine, pursuant to procedures established by the Trustee, if there
continues to be a Refusal to Pay with respect to any Plan. If the Trustee determines that there continues to be a Refusal to Pay with
respect to any Plan, the Trustee shall thereupon transfer into the separate account under the Trust for such Participant sufficient assets
from the Trust to cause the Participant’s separate account to be equal to 100% of the then Current Year Obligations of such Participant
under any applicable Plan with respect to which the separate account was established.
(d) If a timely disputed payment is resolved with the result being that the Participant is entitled to such disputed payment or further
payment, such payment shall be made not later than by the end of the first calendar year in which the Participant and the Company enter
into a legally binding settlement of such dispute, the Company concedes that the amount is payable, or the Company is required to make
such payment pursuant to a final and nonappealable judgment, arbitration award or other binding decision.
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(e) The Trustee shall make distributions from the Trust in accordance with the provisions of this Section 7.6, subject to Article 8. If
such assets are not sufficient, the Company shall be obligated to make the balance of each such payment when due under the terms of
the applicable Plans. The Trustee shall be fully protected in acting without Company direction under this Section 7.6.
7.7 Arbitration. Notwithstanding any provisions of any of the Plans to the contrary, the provisions of this Section 7.7 shall
provide the final and exclusive means of the resolution of benefit disputes between the Company and Participants regarding any Plans. If the
Company and a Participant cannot agree as to the Participant’s right to a Plan benefit after the Company has responded to the Participant’s
claim in accordance with Sections 7.6 (b) and (c), or if the Company fails or refuses to so respond (which failure shall be deemed to constitute a
denial in full of the Participant’s claim), then the Company and the Participant, pursuant to the national policy favoring arbitration announced
by Congress in the Federal Arbitration Act, 9 D.S.C. § 2, shall resolve by arbitration any and all disputes or controversies arising out of or
relating to the Participant’s rights to benefits under the Plan (or Plans) under which the Participant’s claim was made. Arbitration shall be
conducted expeditiously in accordance with the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes
(the “Rules”) by three independent arbitrators, of whom the Company shall appoint one and the Participant shall appoint one, in accordance
with such Rules for the selection of the arbitration panel. The arbitration shall be governed by the United States Arbitration Act, 9 D.S.C.
Section 1-16, as amended from time to time. Judgment upon the award rendered by the arbitrators may be entered by any court having
jurisdiction thereof. The place of arbitration shall be in Houston, Texas or in Montgomery County, Texas. The arbitrators are not empowered to
award consequential, indirect, special, punitive or exemplary damages, and each party hereby irrevocable waives any damages in excess of
actual damages.
The cost of the arbitration of disputes as provided in this Section 7.7 shall be borne by the Company, unless the arbitrator panel
makes a determination that the Participant’s claim was without merit, in which case the Participant shall bear the costs incurred in arbitration or
such share of the costs as determined by the arbitrator panel in its award. In any event, the Participant shall bear the cost of his attorney’s fees
and expenses unless otherwise determined by the arbitrator panel in its award.
7.8 Missing Persons. If any payment directed to be made by the Trustee from the Trust is not claimed by the person entitled
thereto, the Trustee shall notify the Company of that fact. The Trustee thereafter shall have no obligation to search for or ascertain the
whereabouts of any payee under the Trust.
ARTICLE 8
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY

WHEN COMPANY IS INSOLVENT
8.1 Insolvency. The Trustee shall cease the payment of all benefits to Participants if the Company is Insolvent. The Trust Fund
assets shall be general assets of the
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Company and, as such, shall remain subject to claims of the general creditors of the Company (including Participants) under applicable state
and federal law. Nothing in the Trust Agreement shall affect the rights of Participants as general unsecured creditors of the Company under
the Trust or any Plan. No Participant shall have any preferred claim on or any beneficial ownership in the Trust Fund prior to the time for
distribution to such Participant. Any rights of Participants under any Plan and the Trust Agreement shall be mere unsecured contractual rights
against the Company.
Nothing in the Trust Agreement shall in any way (a) diminish any rights of Participants to pursue their rights as general creditors of
the Company with respect to benefits due under any Plan or otherwise or (b) relieve the Company or an Affiliated Entity of any liability
whatsoever to pay any and all benefits due under any Plan.
8.2 Claims of General Creditors. At all times during the continuance of this Trust, the principal and income of the Trust shall be
subject to claims of general creditors of the Company under federal and state law, pursuant to the following procedures:
(a) The Board and the Chief Executive Officer of the Company (“CEO”) shall have the duty to inform the Trustee in writing of
Company’s Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has
become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall
discontinue payment of benefits to Participants.
(b) Unless the Trustee has actual knowledge of the Company’s Insolvency, or has received notice from the Company or a person
claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is
Insolvent. The Trustee may in all events rely on such evidence concerning the Company’s solvency as may be furnished to the Trustee
and that provides the Trustee with a reasonable basis for making a determination concerning the Company’s solvency.
(c) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to the
Participants and shall hold the Trust for the benefit of the Company’s general creditors. Nothing in this Agreement shall in any way
diminish any rights of Participants to pursue their rights as general creditors of the Company with respect to benefits due under the
Plans or otherwise.
(d) The Trustee shall resume the payment of benefits to Participants only after the Trustee has determined that the Company is not
Insolvent or is no longer Insolvent.
After the Trustee receives notice that the Company is Insolvent, the Trustee shall deliver any undistributed assets of the Trust
Fund to satisfy such claims of the general creditors of the Company as a court of competent jurisdiction may direct. The Trustee shall have the
right to pay the assets of the Trust into such court in an interpleader proceeding for the purpose of being directed by such court as to the
proper disposition of such assets.
If any person claiming to be a creditor of the Company files a claim with the Trustee against the assets of the Trust Fund, the
Trustee shall determine, within 30 days after
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receipt of such claim, whether the Company is Insolvent. Pending such determination of the Company’s Insolvency by the Trustee, the
Trustee shall discontinue payments to the Participants and Beneficiaries. The Trustee shall resume holding the Trust assets for the benefit of
the affected Participants and resume making any payments under the Plan to the affected Participants only after the Trustee has determined
that the Company is not Insolvent (or is no longer Insolvent, if the Trustee initially determined the Company to be Insolvent).
8.3 Resumption of Payments to Participants. Provided that there are sufficient assets in the Trust, if the Trustee discontinues the
payment of benefits from the Trust pursuant to Section 8.2 and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plans for the period of such
discontinuance, less the aggregate amount of any payments made to Participants by the Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
ARTICLE 9
RESIGNATION OR REMOVAL OF TRUSTEE
9.1 Resignation or Removal of Trustee. The Trustee may resign at any time by giving thirty (30) calendar days prior written notice
to the Company and the Investment Manager. Subject to the following paragraph, the Company may remove a Trustee by giving thirty
(30) calendar days prior written notice to the Trustee, provided that such removal shall not become effective until the time immediately
preceding the appointment of a successor Trustee pursuant to Section 9.2. Notwithstanding the foregoing, the Company may not remove the
Trustee for the three-year period following the date of a Change of Control.
9.2 Successor Trustee. In the event of the resignation or removal of the Trustee, a successor Trustee shall be appointed by the
Company in writing as soon as practicable. A successor Trustee shall be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at, least $50,000,000, and subject to supervision or examination by Federal or State authority. Written notice
of such appointment shall be given by the Company to the predecessor Trustee and any Investment Manager.
9.3 Duties of Predecessor Trustee and Successor Trustee. Upon the appointment of a successor Trustee, the removed or
resigning Trustee shall transfer and deliver the Trust Fund to such successor Trustee after reserving such reasonable amounts as necessary
to provide for any expenses or fees chargeable against the Trust. The former Trustee shall execute any instruments necessary or reasonably
requested by the Company or the successor Trustee to evidence the transfer. A Trustee that resigns or is removed shall promptly furnish to
the Company and the successor Trustee a final account of its administration of the Trust.
A successor Trustee shall succeed to the right and title of the predecessor Trustee in the Trust, and the predecessor Trustee shall
deliver the property comprising the Trust to the
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successor Trustee together with any instruments of transfer, conveyance, assignment, and further assurances as may be reasonably
requested or required. Each successor Trustee shall have all the powers, rights, and duties conferred by this Agreement as if named the initial
Trustee, and all references herein to “Trustee” shall refer to the successor Trustee as of and following the effective time of such appointment.
Subject to applicable law, no successor Trustee shall be liable for any act or failure to act of a predecessor Trustee. Upon settlement of the
account and transfer of the Trust assets to the successor Trustee, all rights and privileges under this Trust Agreement shall vest in the
successor Trustee. Neither the Trustee nor its successor shall be liable for the acts of the other except as required by law which cannot be
waived.
ARTICLE 10
EFFECT OF CHANGE OF CONTROL
10.1 Potential Change of Control. For purposes of this Agreement, the term “Potential Change of Control” shall be deemed to
have occurred upon the date that a transaction is made known publicly that, if consummated, would result in a Change of Control. In the event
that the transaction is not consummated within two (2) years from the date the Potential Change of Control was triggered without a Change of
Control occurring, the Potential Change of Control shall be deemed void.
10.2 Change of Control. For purposes of this Agreement, the term “Change of Control” shall be deemed to have occurred on the
date as of the first day anyone or more of the following conditions shall have been satisfied:
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any acquisition pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (a) of this Section 10.2; or
(b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date, whose
election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent
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Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(c) Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company or the acquisition of assets of another entity (a “Business Combination”), in each case, unless, following
such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially own,
directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
10.3 Funding Upon a Change of Control. Upon a Change of Control, the Company shall, as soon as possible, but in no event
longer than thirty (30) calendar days following the Change of Control make an irrevocable contribution to the Trust in an amount equal to the
then Current Aggregate Accrued Obligations. As of each January 1, the Company shall make an irrevocable contribution to the Trust in an
amount sufficient to cause the then value of the Trust to be equal to the Current Aggregate Accrued Obligations as of the December 31
immediately preceding such January 1.
10.4 Elimination of Investment Restrictions and Changes to Article 6 Upon a Change of Control. Immediately upon a Change of
Control, Sections 7.4 and 5.2 shall become inapplicable and of no force and effect. Any action taken by the Company pursuant to Article 6
shall require the consent of the Trustee, which consent shall not be unreasonably withheld.
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10.5 Amendment of Trust Agreement Without Consent of Participants. Following a Potential Change of Control or a Change of
Control, this Agreement may be amended by the Company at any time pursuant to Section 11.1, without the consent of Participants pursuant
to Section 10.6, but only to the extent necessary to (a) maintain the status of the Trust as a “grantor trust” under the Code, (b) evidence the
succession of another corporation to the Company and the assumption by any such successor of this Agreement, (c) cure any ambiguity, or
to correct or supplement any provision herein, which is determined to be inconsistent with any other provision herein, (d) make any other
changes with respect to matters or questions arising under this Agreement which do not adversely affect the interest of any Participant in any
material respect, or (e) to make any technical amendments which are required in order to comply with any applicable law or regulation that
cannot be waived. In the event a Change of Control does not occur within two (2) years of notification that a Potential Change of Control has
occurred, the Company’s right to amend the Trust without the consent of the Participants shall be restored without regard to Section 10.6.
10.6 Amendment of Trust Agreement With Consent of Participants. Subject to Section 10.5, following a Potential Change of
Control or a Change of Control, this Agreement may be amended by the Company only with the prior written consent of a majority of
Participants who, at the time such amendment is sought, are listed on the Payment and Obligation Schedule. Upon receipt of a request from the
Company for an amendment at such time, the Trustee shall be responsible for securing such consents in a timely fashion. Unless ordered by a
court of competent jurisdiction, the Trustee shall not reveal to the Company (or to any other person) any information concerning such
consents, except whether the required majority has been achieved.
10.7 Additional Participants. Following a Potential Change of Control or a Change of Control, the Company may not add
Participants to the Payment and Obligation Schedule unless the Company makes an irrevocable contribution to the Trust in an amount equal
to the then Current Aggregate Accrued Obligation of each such Participant.
10.8 Notification of Potential Change of Control or a Change of Control The Chief Executive Officer, the Chief Financial Officer or
the General Counsel of the Company shall have the specific authority to determine whether a Potential Change in Control or Change in Control
has transpired, and to determine whether the Potential Change in Control is void under the guidance of this Section 10 and shall be required to
give the Trustee notice of a Potential Change in Control, a Change in Control, or a void Potential Change in Control. The Trustee shall be
entitled to rely upon such notice, but if the Trustee receives notice of a Change in Control from another source, the Trustee shall make its own
independent determination
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ARTICLE 11
AMENDMENT OR TERMINATION
11.1 Amendment. Subject to Sections 10.5 and 10.6:

(a) This Agreement may be amended by a written instrument executed by the Trustee and by a Vice President or higher level officer
of the Company, or as approved or adopted by resolution of the Board or its Compensation and Benefits Committee. Notwithstanding
the foregoing, no such amendment shall directly conflict with the terms of the Plans or shall make the Trust revocable.
(b) The duties and liabilities of the Trustee under this Agreement cannot be changed without the Trustee’s written consent, which
shall not be unreasonably withheld.
(c) No amendment shall be made to this Trust Agreement that shall (i) cause it or the assets of the Trust Fund to be governed by or
subject to Part 2, 3 or 4 of Title I of ERISA, or (ii) adversely affect any benefits accrued under any Plan as of the date of such amendment
in respect of any Participant.
(d) The Company, from time to time, may add, remove, amend or modify additional Plans to be covered by this Trust by formal
amendment to this Trust Agreement. Such a designation shall be in writing, signed by the appropriate officer of the Company, and filed
with the Trustee together with the new version of Appendix A which shall be attached to the Agreement. The Plans are incorporated
herein by this reference.
11.2 Termination.
(a) All the rights, titles, powers, duties, discretions, and immunities imposed on or reserved to the Trustee, the Company, the Board
and any Investment Manager, shall continue in effect with respect to the Trust until all benefits payable to Participants under the Plans
have been paid and all assets in the Trust have been distributed by the Trustee under the terms of the Trust and the Plans.
(b) The Trust shall terminate upon the expiration of twenty-five years from the Effective Date and shall automatically renew for an
additional period of twenty-five (25) years unless the Company provides written notice to the Trustee to the contrary no later than thirty
(30) calendar days prior to the date the Trust would otherwise terminate. Prior to termination of the Trust pursuant to the preceding
sentence, the Trust shall not terminate unless Participants are no longer entitled to benefits pursuant to the terms of any of the Plans.
Upon the date that Participants are no longer entitled to any benefits pursuant to the terms of any of the Plans, the Trust shall terminate.
Upon termination of this Trust, the Trustee shall reserve such reasonable amounts as it may deem necessary to provide for the payment
of expenses or fees then or thereafter chargeable to the Trust. Upon termination of this Trust, the Trustee shall continue to have such of
the powers provided in this Agreement as are necessary or desirable for the orderly liquidation and distribution of the Trust. Upon
termination of the Trust, any assets remaining in the Trust shall be returned to Company.
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11.3 Duration. Subject to Section 11.2(b), the Trust is hereby declared to be irrevocable and shall continue until (a) all benefits or
other payments required by the Plans have been made to Participants and Beneficiaries and all expenses of the Trust have been fully paid or
(b) until the Trust Fund contains no assets and retains no claims to recover assets from the Company or any other person or entity, whichever
shall first occur. In the event that the Trust Fund contains no assets, the Trustee shall not be required to initiate, pursue or continue any claim
to recover assets unless and until arrangements satisfactory to the Trustee have been made to pay or reimburse the Trustee’s reasonable fees
and expenses.
11.4 Distribution upon Termination. If this Trust terminates, the Trustee shall liquidate the Trust Fund and, after its final account
has been settled, shall distribute to the Company the net balance of any assets of the Trust remaining after (a) all expenses of the Trust have
been paid and (b) all benefits have been fully distributed to the Participants or Beneficiaries. The powers of the Trustee hereunder shall
continue so long as any assets of the Trust Fund remain under its control or the control of an Investment Manager.
11.5 Consolidation or Merger of the Company. The Trust will not automatically terminate with respect to the Company in the event
it consolidates, merges and is not the surviving corporation, sells substantially all of its assets, is a party to a reorganization and substantially
all of its assets are transferred to another entity, liquidates or dissolves, if there is a successor organization to the Company. The resulting
successor organization shall continue the Trust simultaneously with the effective date of such corporate event.
ARTICLE 12
LIABILITY AND INDEMNIFICATION
12.1 Liabilities Mutually Exclusive. To the extent permitted by law, the Company, the Trustee, members of the Board, Company
officers, and any Investment Manager, shall be responsible only for its or their own acts or omissions. Notwithstanding the foregoing, such
individuals or entities may be separately provided indemnification protection that may reallocate such economic responsibility.
12.2 Indemnification. The Company hereby agrees to indemnify and hold harmless the Trustee from and against any losses,
damages, liabilities, claims, costs, or expenses (including reasonable attorneys’ fees) which the Trustee may reasonably incur by reason of the
negligence or willful misconduct of the Company. In making any distributions and taking any other action hereunder, the Trustee may rely
upon and shall be fully protected in relying upon, any notice, certificate, or other paper or written document provided by an authorized person
on behalf of the Company and believed to be genuine. The Trustee hereby agrees to indemnify and hold harmless the Company from and
against losses, damages, liabilities, claims, costs or expenses (including reasonable attorney’s fee) which the Company may reasonably incur
by reason of the negligence or willful misconduct of the Trustee.
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12.3 Trustee’s Actions Conclusive. Except as otherwise provided by law, the Trustee’s exercise or nonexercise of its powers and
discretion in good faith shall be conclusive on all persons. No one shall be obliged to see to the application of any money paid or property
delivered to the Trustee, except to the extent such person is acting as an Investment Manager as respects such money or property. The
certificate of the Trustee that it is acting in accordance with this Agreement will fully protect all persons dealing with the Trustee. If there is a
disagreement between the Trustee and anyone as to any act or transaction reported in any accounting, the Trustee shall have the right to a
settlement of its account by any court of competent jurisdiction in Texas.
ARTICLE 13
MISCELLANEOUS
13.1 Severability. Any provision of this Agreement prohibited by law shall be ineffective but only to the extent of any such
prohibition, without invalidating or affecting the enforceability of the remaining provisions hereof.
13.2 Nonalienation. Benefits payable to Participants under this Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered, or subjected to attachment, garnishment, levy, execution, or other legal or equitable process.
13.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Texas without regard to
its conflicts of law principles, to the extent not preempted by federal law.
13.4 Evidence. Evidence required of anyone under this Agreement shall be signed, made, or presented by the proper party or
parties and may be by certificate, affidavit, document, or other information, which the person acting on it considers pertinent and reliable.
13.5 Notice and Waiver of Notice. Any notice required under any of the provisions of this Trust Agreement shall be deemed
effectively given only if such notice is in writing and is delivered personally or by certified or registered mail, addressed to the addresses as
set forth below of the parties hereto. The addresses of the parties are as follows:
(a) The Company:
Anadarko Petroleum Corporation
Attention: Executive Compensation Department
1201 Lake Robbins Drive
The Woodlands, Texas 77380
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(b) The Trustee:

Wachovia Bank, National Association
Attention: Executive Benefits Group
One West Fourth Street, NC 6251
Winston-Salem, NC 27101
The Company or Trustee may at any time change the address to which notices are to be sent to it by giving written notice thereof in the
manner provided above. Not withstanding the provisions of this Section 13.5, any notice required under any provisions of this Trust
Agreement may be waived by the person entitled to such notice.
13.6 Counterparts. This Agreement may be executed in two or more counterparts, anyone of which will be an original without
reference to the others.
13.7 Gender and Number. Except when otherwise indicated by the context, words denoting the masculine gender shall include the
feminine; the singular shall include the plural, and the plural shall include the singular.
13.8 Scope of this Agreement. The Plans and this Agreement will be binding on all persons entitled to benefits hereunder and their
respective heirs and legal representatives, and upon the Company, the Trustee and any Investment Managers, and their successors and
assigns.
13.9 Statutory References. Any references in this Agreement to a section of the Code and other statutes shall include any
comparable section or sections of any future legislation that amends, supplements, or supersedes such sections.
13.10 Merger of Trustee. If the Trustee at any time acting hereunder shall be merged or consolidated with, or shall sell or transfer
substantially all of its assets and business to another corporation, state or federal, or shall be in any manner reorganized or reincorporated,
then the corporation resulting therefrom, or the corporation to which such sale or transfer shall be made, shall be deemed to be the Trustee
then acting hereunder.
13.11 Construction. The headings contained herein are inserted only as a matter of convenience and for reference and in no way
define, limit, enlarge, or describe the scope or intent of the Plans and in no way shall affect the Plans or the construction of any provision of
this Trust Agreement. The words “herein,” “hereof,” “hereunder,” and other similar compounds of the word “here” shall refer to the entire
Trust Agreement not to any particular article, section or provision of the Trust Agreement.
13.12 Situs. At all times, the Trust and its assets shall be located within the United States.
13.13 Trust Not an Employment Contract with Participants. The adoption and maintenance of the Trust shall not be deemed to be
a contract between the Company and any
28
Participant that gives any Participant the right to be retained in the employment of the Company (or, if a director, to remain as a director of the
Company) or an Affiliated Entity; to interfere with the rights of the Company or an Affiliated Entity to discharge any employee at any time; or
to interfere with the employee’s right to terminate his employment at any time.
13.14 Spendthrift Provisions. No amount payable or to become payable from the Trust will be subject: (a) to anticipation or
assignment by any person entitled to receive benefits under any Plan; (b) to attachment by, interference with, or control of any creditor of any
person entitled to receive benefits under any Plan; or (c) to being taken or reached by any legal or equitable process in satisfaction of any debt
or liability of any person entitled to receive benefits under any Plan. Any attempted conveyance, transfer, assignment, mortgage, pledge, or
encumbrance of the Trust Fund, any part of it or any interest in it, by any person entitled to receive benefits under any Plan prior to
distribution will be void, whether that conveyance, transfer, assignment, mortgage, pledge, or encumbrance is intended to be effective before
or after any distribution of Trust assets or the termination of the Trust Fund. In addition, the Trustee shall not recognize any conveyance,
transfer, assignment, mortgage, pledge or encumbrance by any person entitled to receive benefits under any Plan, or to pay any amount to any
creditor or assignee of such person for any cause whatsoever. However, this Section 13.14 shall not affect the provisions of Article 8
regarding the claims of general creditors of the Company.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company and Trustee have caused this amended and restated Trust Agreement to be executed by their
duly authorized officers, in multiple counterparts, each of which shall be deemed to be an original, effective as of the Effective Date.
COMPANY:
By: /s/ Robert G. Gwin

Name: Robert G. Gwin
Title: Senior Vice President
TRUSTEE:
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ D. Michael Hill

Name: D. Michael Hill
Title: Senior Vice President
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EXHIBIT 12

CONSOLIDATED STATEMENT OF COMPUTATION OF RATIOS OF
EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Ye ars En de d De ce m be r 31
(Unau dite d)
millions except ratio amounts 2008 2007 2006 2005 2004
Income from continuing operations before income taxes (a) $5,346 $6,329 $3,737 $3,253 $2,110
Minority interests 23 — — — —
Fixed charges, to the extent they affect current year earnings 1,146 1,328 778 234 418
Undistributed (earnings) losses of equity investees 4 (54) (21) — 13
Minority interests in pre-tax income of subsidiaries that have not incurred fixed charges (23) — — — —
Total Earnings 6,496 7,603 4,494 3,487 2,541
Interest expense including capitalized interest 876 1,214 730 266 428
Interest expense included in other (income) expense 123 102 — — —
Estimated interest portion of rental expenditures (b) 356 316 128 13 10
Total Fixed Charges $1,355 $1,632 $ 858 $ 279 $ 438
Preferred Stock Dividends 2 5 5 8 8
Combined Fixed Charges and Preferred Stock Dividends $1,357 $1,637 $ 863 $ 287 $ 446
Ratio of Earnings to Fixed Charges 4.79 4.66 5.24 12.50 5.80
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 4.79 4.64 5.21 12.15 5.70
These ratios were computed by dividing earnings by either fixed charges or combined fixed charges and preferred stock dividends. For this
purpose, earnings include income before income taxes before considering the effect of fixed charges and undistributed earnings of equity
method investees. Fixed charges include amortization of debt issuance costs, interest on debt and the estimated interest component of rentals,
whether expensed or capitalized. Preferred stock dividends are adjusted to reflect the amount of pretax earnings required for payment.
(a) Pretax income from continuing operations for the year ended December 31, 2007 includes gain on asset divestitures of $4.66 billion. Gains
(losses) on asset divestitures for other periods presented did not have a significant effect on the corresponding ratios of earnings to
fixed charges and to combined fixed charges and preferred stock dividends.
(b) Reflects a portion of rental expenditures representative of interest factor, whether such rentals are expensed or capitalized when incurred.
For the years ended December 31, 2008, 2007 and 2006, estimated interest component in rentals includes approximately $270 million, $225
million and $80 million, respectively, associated with the Company’s drilling rig leases.
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES
Anadarko E&P Company LP

a Delaware limited partnership,
Anadarko Energy Services Company
a Delaware corporation,
Anadarko Holding Company

A Utah corporation,
Anadarko Offshore Holding Company, LLC.

a Delaware limited liability company,
Anadarko Worldwide Holdings CV

a Netherlands limited liability company,
Kerr-McGee Corporation
Kerr-McGee Oil & Gas Corporation

Kerr-McGee Oil & Gas Onshore LP

a Delaware limited partnership,
Kerr-McGee Onshore Holding LLC

Kerr-McGee Worldwide Corporation

KM BM-C-Seven Ltd.
a Bahama Islands limited liability company,
Western Gas Resources, Inc.

WHL, Inc.
Anadarko Algeria Company LLC

Anadarko Global Funding II Ltd.

Anadarko Land Corporation

a Nebraska corporation,
Anadarko Midkiff/ Chaney Dell LLC

Anadarko West Texas LLC

Howell Petroleum Corporation

Kerr-McGee (Nevada) LLC

a Nevada limited liability company,
Kerr-McGee China Petroleum LTD.

Kerr-McGee Shared Services Company LLC

KM Investment Corporation
a Nevada corporation,
Lance Oil & Gas Company, Inc.

Mountain Gas Resources LLC

Resources Holdings Inc.

Upland Industries Corporation

a Nebraska corporation,
WGR Asset Holding Company LLC

a Delaware limited liability company
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors

We consent to the incorporation by reference in the registration statements on Form S-3 and S-8 (No. 33-8643), Form S-3 (Nos. 333-103102 and
333-137183) and Form S-8 (Nos. 33-54485 and 333-152049) of Anadarko Petroleum Corporation and subsidiaries of our reports dated
February 24, 2009, with respect to the consolidated balance sheets of Anadarko Petroleum Corporation and subsidiaries as of December 31,
2008 and 2007, and the related consolidated statements of income, stockholders’ equity, comprehensive income, and cash flows for each of the
years in the three-year period ended December 31, 2008, and the effectiveness of internal control over financial reporting as of December 31,
2008, which reports appear in the December 31, 2008 annual report on Form 10-K of Anadarko Petroleum Corporation.
Our report on the consolidated financial statements referred to above, refers to a change in the method of accounting for uncertainty in income
taxes in 2007.
/s/ KPMG LLP
Houston, Texas
February 24, 2009
Exhibit 23.2
February 24, 2009

The Woodlands, TX 77380
Re: Securities and Exchange Commission

Form 10-K of Anadarko Petroleum Corporation
Gentlemen:
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 and S-8 (No. 33-8643), Form S-3 (Nos.
333-103102 and 333-137183) and Form S-8 (Nos. 33-54485 and 333-152049) of Anadarko Petroleum Corporation of our Procedures and Methods
Review Letter dated February 24, 2009, regarding the Anadarko Petroleum Corporation Proved Reserves and Future Net Revenues as of
December 31, 2008, and of references to our firm which are to be included in Form 10-K for the year ended December 31, 2008 to be filed by
Anadarko Petroleum Corporation with the Securities and Exchange Commission.
Miller and Lents, Ltd. has no financial interest in Anadarko Petroleum Corporation or in any if its affiliated companies or subsidiaries and
is not to receive any such interest as payment for such letter. Miller and Lents, Ltd. also has no director, officer, or employee employed or
otherwise connected with Anadarko Petroleum Corporation. We are not employed by Anadarko Petroleum Corporation on a contingent basis.
Very truly yours,
MILLER AND LENTS, LTD.
By: /s/ ROBERT J. OBERST

Robert J. Oberst
Senior Vice President
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each undersigned Director of ANADARKO PETROLEUM CORPORATION (the “Company”), a
Delaware corporation, does hereby constitute and appoint R. A. WALKER, M. CATHY DOUGLAS, and ROBERT K. REEVES, and each of
them, his or her true and lawful attorney and agent to do any and all acts and things and execute any and all instruments which, with the
advice of counsel, said attorney and agent may deem necessary or advisable to enable the Company to comply with the Securities Exchange
Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in connection with the filing
under said Act of the Form 10-K Annual Report for the Year Ended December 31, 2008, including specifically, but without limitation thereof, to
sign his or her name as a Director of the Company to the Form 10-K Annual Report for the Year Ended December 31, 2008 filed with the
Securities and Exchange Commission, and to any instrument or document filed as a part of, or in connection with, said Form 10-K Annual
Report for the Year Ended December 31, 2008 or amendment thereto; and the undersigned does hereby ratify and confirm all that said attorney
and agent shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents this 20th day of February, 2009.
/s/ JAMES T. HACKETT /s/ ROBERT J. ALLISON, JR.

James T. Hackett Robert J. Allison, Jr.
/s/ LARRY BARCUS /s/ JOHN R. BUTLER, JR.

Larry Barcus John R. Butler, Jr.
/s/ LUKE R. CORBETT /s/ H. PAULETT EBERHART

Luke R. Corbett H. Paulett Eberhart
/s/ PETER J. FLUOR /s/ JOHN R. GORDON

Peter J. Fluor John R. Gordon
/s/ JOHN W. PODUSKA, SR. /s/ PAULA ROSPUT REYNOLDS

John W. Poduska, Sr. Paula Rosput Reynolds
EXHIBIT 31.1
CERTIFICATIONS
I, James T. Hackett, certify that:

1. I have reviewed this annual report on Form 10-K of Anadarko Petroleum Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 24, 2009

EXHIBIT 31.2
CERTIFICATIONS
I, R. A. Walker, certify that:

1. I have reviewed this annual report on Form 10-K of Anadarko Petroleum Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 24, 2009
/s/ R. A. WALKER
Senior Vice President, Finance and Chief Financial Officer
EXHIBIT 32
SECTION 1350 CERTIFICATION OF PERIODIC REPORT
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, James T. Hackett, Chairman, President and Chief
Executive Officer of Anadarko Petroleum Corporation (Company) and R. A. Walker, Senior Vice President, Finance and Chief Financial Officer
of the Company, certify that:
(1) the Annual Report on Form 10-K of the Company for the period ending December 31, 2008, as filed with the Securities and Exchange
Commission on the date hereof (Report), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the
Company.
February 24, 2009

James T. Hackett
February 24, 2009

/s/ R. A. WALKER
R. A. Walker
Senior Vice President, Finance and Chief
Financial Officer
This certification is made solely pursuant to 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written
statement required by Section 906 will be retained by Anadarko and furnished to the Securities and Exchange Commission or its staff upon
request.
EXHIBIT 99
February 24, 2009
Mr. R. A. Walker
Senior Vice President, Finance
and Chief Financial Officer
The Woodlands, TX 77380
Re: Procedures and Methods Review of

Proved Reserves and Future Net Cash Flows
As of December 31, 2008
Dear Mr. Walker:

At your request, Miller and Lents, Ltd. reviewed the procedures and methods employed by Anadarko Petroleum Corporation (Anadarko)
in preparing its internal estimates of proved reserves and future net revenues (hereafter referred to as future net cash flows to be consistent
with Anadarko’s terminology in its 10K) as of December 31, 2008. The purpose of the review was to determine that the procedures and
methods used by Anadarko to estimate its proved reserves are based on generally accepted petroleum engineering and evaluation principles
and are in accordance with the definitions contained in the Securities and Exchange Commission (SEC) Regulation S-X, Rule 4-10(a).
From July through December 2008, we participated in the review of 20 fields which included major assets in the United States, Algeria,
and China. Reserves estimates for these properties were approximately 1,899 million barrels of oil equivalent, or approximately 83 percent of
Anadarko’s total proved reserves as of December 31, 2008. In each review, Anadarko’s technical staff presented us with an overview of the
data, methods, and assumptions used in its reserve estimates. The data presented included pertinent seismic information, geologic maps, well
logs, production tests, material balance calculations, reservoir simulation models, well performance data, operating procedures and relevant
economic criteria. Subsequent to the reviews, we were provided with additional data and information that we requested in certain instances to
satisfy ourselves that the procedures and methods used were in accordance with standard industry practices.
Based upon these reviews and our subsequent due diligence, it is our judgment that the general procedures and methods employed by
Anadarko in estimating its December 31, 2008 proved reserves and future net cash flows are reasonable and in accordance with the SEC
reserves definitions.
Anadarko’s proved reserves were estimated generally by extrapolation of well-established historical production performance trends
and/or were supported by other geologic and engineering studies. Where sufficient performance data did not exist, Anadarko’s reserves were
estimated by volumetric calculations or by analogy to similar producing properties.
The ownership, reversions, test and production data, operating costs, estimated capital expenditures and other information presented by
Anadarko during the reviews were accepted as represented. We did not conduct any field inspections or other tests in conjunction with this
procedures and methods review.
Our work was a review of Anadarko’s procedures and methods only and does not constitute a complete review, study, or audit of
Anadarko’s estimated proved reserves and future net cash flows. Furthermore, our judgments are based on accepted standards of
professional investigation but are subject to those generally recognized uncertainties associated with interpretation of geological,
geophysical, and engineering information.
Miller and Lents, Ltd. is an independent oil and gas consulting firm. No director, officer, or key employee of Miller and Lents, Ltd. has
any financial ownership in Anadarko or any affiliate. Our compensation for the required investigations is not contingent on the results
obtained and reported, and we have not performed other work that would affect our objectivity. Preparation of this letter was supervised by an
officer of the firm who is a professionally qualified and licensed Professional Engineer in the State of Texas with more than 20 years of relevant
experience in the estimation, assessment, and evaluation of oil and gas reserves.
Any distribution or publication of this letter or any part thereof must include this letter in its entirety.
Very truly yours,
MILLER AND LENTS, LTD.
By /s/ ROBERT J. OBERST

Robert J. Oberst
Senior Vice President, P.E.
RJO/eb

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Index to Financial Statements

ANADARKO PETROLEUM CORPORATION

Index to Financial Statements

Index to Financial Statements

Items 1 and 2. Business and Properties

Index to Financial Statements

Oil and Gas Properties and Activities

Index to Financial Statements

Sales Volumes and Prices

2008 2007 2006

Index to Financial Statements

Sales Prices and Production Costs

2008 2007 2006

Index to Financial Statements

Properties and Activities—United States

Index to Financial Statements

Index to Financial Statements

Index to Financial Statements

Index to Financial Statements

Index to Financial Statements

Index to Financial Statements

Properties and Activities—Algeria

Index to Financial Statements

Properties and Activities—Other International

Index to Financial Statements

Net Exploratory Net Development

Wells in the process

Index to Financial Statements

Oil Wells* Gas Wells*

* Includes wells containing multiple completions as follows:

Gross 371 1,681

Properties and Leases

Midstream Properties and Activities

Index to Financial Statements

Index to Financial Statements

Segment and Geographic Information

Regulatory Matters, Environmental and Additional Factors Affecting Business

2008 2007 2006

Index to Financial Statements

Item 1A. Risk Factors

Index to Financial Statements

• domestic and foreign governmental regulations and taxes;

Index to Financial Statements

Our results of operations could be adversely affected by asset impairments.

Index to Financial Statements

Index to Financial Statements

The credit risk of financial institutions could adversely affect us.

Index to Financial Statements

Failure to replace reserves may negatively affect our business.

Index to Financial Statements

Our drilling activities may not be productive.

Index to Financial Statements

• fires, explosions, blow-outs and surface cratering;

We have limited control over the activities on properties we do not operate.

Index to Financial Statements

We may reduce or cease to pay dividends on our common stock.

Item 1B. Unresolved Staff Comments

Item 3. Legal Proceedings

Index to Financial Statements